Hasan, Shehub Bin and Alam, Md Samsul and Paramati, Sudharshan Reddy and Islam, Md Shahidul (2022) Does firm-level political risk affect cash holdings? Review of Quantitative Finance and Accounting, 59 (1). pp. 311-337. DOI https://doi.org/10.1007/s11156-022-01049-9
Hasan, Shehub Bin and Alam, Md Samsul and Paramati, Sudharshan Reddy and Islam, Md Shahidul (2022) Does firm-level political risk affect cash holdings? Review of Quantitative Finance and Accounting, 59 (1). pp. 311-337. DOI https://doi.org/10.1007/s11156-022-01049-9
Hasan, Shehub Bin and Alam, Md Samsul and Paramati, Sudharshan Reddy and Islam, Md Shahidul (2022) Does firm-level political risk affect cash holdings? Review of Quantitative Finance and Accounting, 59 (1). pp. 311-337. DOI https://doi.org/10.1007/s11156-022-01049-9
Abstract
We investigate whether firm-level political risk affects corporate cash holdings. Taking a sample of 5424 US firms with 129,750 firm-quarter observations from 2002Q1 to 2021Q3, we find that cash holdings is higher for firms with greater exposure to firm-level political risk. The positive relationship between firm political risk and cash holdings is consistent for financial constraint and non-constraint firms, high and low growth firms, pro-cyclical and counter-cyclical and competitive industries. Further, our findings are consistent to alternative measures of firm-level political risk and cash holdings. In addition, our findings remain robust with different endogeneity tests: a natural experiment, an instrumental variable approach, and a propensity score matching. Overall, we present novel evidence on the determinants of corporate cash holdings.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Firm-level political risk; Cash holdings; Financial constraints; Business cycle |
| Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School Faculty of Social Sciences > Essex Business School > Essex Accounting Centre |
| SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
| Depositing User: | Unnamed user with email elements@essex.ac.uk |
| Date Deposited: | 23 Feb 2024 10:45 |
| Last Modified: | 23 Feb 2024 10:45 |
| URI: | http://repository.essex.ac.uk/id/eprint/34911 |
Available files
Filename: RQFA-Manuscript-Firm-level political Risk and Cash Holdings (2).pdf
Licence: Creative Commons: Attribution 4.0