Political connections and the value of cash holdings

Yuanto Kusnadi

Finance Research Letters, 2019, vol. 30, issue C, 96-102

Abstract: This study examines how political connections influence the value of cash holdings in an international setting. The main finding reveals that political connections are not associated with the value of cash holdings in the overall sample. However, further analysis demonstrates that political connections are negatively associated with the value of cash holdings for firms in emerging markets and in countries with high levels of corruption. Moreover, the negative valuation of cash holdings is driven by firms that are connected through large shareholders. Overall, the findings provide new insights into the value relevance of cash holdings, especially for politically connected firms.

Keywords: Political connections; Value of cash holding; Corruption (search for similar items in EconPapers)
JEL-codes: F50 F54 G15 G34 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:30:y:2019:i:c:p:96-102

DOI: 10.1016/j.frl.2019.03.035

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