Does firm-level political risk affect cash holdings?

Journal article

Hasan, S., Alam, M., Paramati, S. and Islam, S. 2022. Does firm-level political risk affect cash holdings? Review of Quantitative Finance and Accounting. 59, p. 311–337. https://doi.org/10.1007/s11156-022-01049-9
AuthorsHasan, S., Alam, M., Paramati, S. and Islam, S.
Abstract

We investigate whether firm-level political risk affects corporate cash holdings. Taking a sample of 5,424 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.

KeywordsFirm-level political risk; cash holdings; financial constraints; business cycle
Year2022
JournalReview of Quantitative Finance and Accounting
Journal citation59, p. 311–337
PublisherSpringer
ISSN1573-7179
Digital Object Identifier (DOI)https://doi.org/10.1007/s11156-022-01049-9
Web address (URL)https://link.springer.com/article/10.1007/s11156-022-01049-9
https://centaur.reading.ac.uk/103435/
Accepted author manuscript
License
All rights reserved
File Access Level
Open
Output statusPublished
Publication dates
Online02 Mar 2022
Publication process dates
Accepted19 Jan 2022
Deposited11 Dec 2023
Permalink -

https://repository.derby.ac.uk/item/q1956/does-firm-level-political-risk-affect-cash-holdings

Log in to edit

Download files

Accepted author manuscript
RQFA-Manuscript-17-01-22-Final.docx
License: All rights reserved
File access level: Open

  • 35
    total views
  • 65
    total downloads
  • 1
    views this month
  • 2
    downloads this month

Export as

Related outputs

Managerial ability and debt choice
Alam, M., Hasan, M. M., Alam, N. and Islam, M. S. 2024. Managerial ability and debt choice. Abacus. pp. 1-41. https://doi.org/10.1111/abac.12334
Is Monetary Policy a Driver of Cryptocurrencies? Evidence from a Structural Break GARCH-MIDAS Approach
Alam, M., Amendola, A., Candila, V. and Jabarabadi, S. D. 2024. Is Monetary Policy a Driver of Cryptocurrencies? Evidence from a Structural Break GARCH-MIDAS Approach. Econometrics. 12 (1), pp. 1-19. https://doi.org/10.3390/econometrics12010002
Does the institutional quality matter for renewable energy promotion in the OECD economies?
Rafiq, S., Paramati, S. R., Alam, M., Hafeez, K. and Shafiullah, M. 2023. Does the institutional quality matter for renewable energy promotion in the OECD economies? International Journal of Finance and Economics. pp. 1-16. https://doi.org/10.1002/ijfe.2926
The impact of board gender composition on loan covenant violations
Alam, M., Atif, M., Cumming, D. and Islam, S. 2023. The impact of board gender composition on loan covenant violations. Corporate Governance: An International Review . pp. 1-29. https://doi.org/10.1111/corg.12561
Cash-rich Firms and Carbon Emissions
Alam, M., Safiullah, M. and Islam, M. 2022. Cash-rich Firms and Carbon Emissions. International Review of Financial Analysis. 81, pp. 1-14. https://doi.org/10.1016/j.irfa.2022.102106
Firm-level Political Risk and Distance-to-default
Alam, M. 2022. Firm-level Political Risk and Distance-to-default. Journal of Financial Stability. 63, pp. 1-16. https://doi.org/10.1016/j.jfs.2022.101082
Do all institutional investors care about corporate carbon emissions?
Alam, M., Alam, S. and Islam, S. 2022. Do all institutional investors care about corporate carbon emissions? Energy Economics. 115, pp. 1-20. https://doi.org/10.1016/j.eneco.2022.106376