Pandemic effect on corporate financial asset holdings: Precautionary or return-chasing?

Haoyu Gao, Huiyu Wen and Xingjian Wang

Research in International Business and Finance, 2022, vol. 62, issue C

Abstract: This study empirically investigates whether and how the COVID-19 pandemic affects corporate financial asset holdings. We find that firms with higher pandemic exposure are less likely to hold financial assets. Mechanism analyses suggest that the return-chasing rationale dominates the precautionary motive concerning the pandemic effect on corporate financial asset holdings. Furthermore, firms prefer to liquidate highly liquid financial assets to fill the pandemic-induced liquidity shortage. This study contributes to the economic consequences of the COVID-19 pandemic regarding corporate portfolio choice, and sheds light on corporate resilience to crises.

Keywords: Financial asset holdings; COVID-19 pandemic; Precautionary; Return-chasing; Portfolio choice (search for similar items in EconPapers)
JEL-codes: G31 G32 G34 G38 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:62:y:2022:i:c:s0275531922001374

DOI: 10.1016/j.ribaf.2022.101750

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