The cash-holding link within the supply chain

Tri Tri Nguyen (), Manh Cuong Nguyen (), Hung Quang Bui () and Tuyet Nhung Vu ()
Additional contact information
Tri Tri Nguyen: University of Brighton
Manh Cuong Nguyen: University of Westminster
Hung Quang Bui: University of Economics Ho Chi Minh City
Tuyet Nhung Vu: Loughborough University

Review of Quantitative Finance and Accounting, 2021, vol. 57, issue 4, No 6, 1309-1344

Abstract: Abstract Using a customer–supplier matched sample of US-listed firms from 1980 to 2016, we study the corporate cash-holding relationship between suppliers and their major customers. The key findings suggest that the cash-holding levels of suppliers are positively affected by those of their major customers, consistent with the liquidity argument. The effects are more pronounced when the major customers are in more favourable financial conditions and when they are considered more important to their suppliers. Our results are robust to various endogeneity problems and additional tests. Taken together, these results bring forth an important corporate cash-holding link within the supply chain.

Keywords: Cash holdings; Customer–supplier relationships; Supply chain (search for similar items in EconPapers)
JEL-codes: G30 G31 G32 L14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11156-021-00979-0

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