Corporate Cash Holding in Asia

Charles Yuji Horioka and Akiko Terada-Hagiwara
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Charles Yuji Horioka: School of Economics, University of the Philippines; National Bureau of Economic Research; and Institute of Social and Economic Research, Osaka University
Akiko Terada-Hagiwara: Economic and Research Department, Asian Development Bank

No 201311, UP School of Economics Discussion Papers from University of the Philippines School of Economics

Abstract: In this paper, we analyze the determinants of corporate saving in the form of changes in the stock of cash for 11 Asian economies using firm-level data from the Oriana Database for the 2002–2011 period. We find some evidence that cash flow has a positive impact on the change in the stock of cash, which suggests that Asian firms are borrowing constrained and that they save more when their cash flow increases so that they will be able to finance future investments. Moreover, we find in the developed economy sample that, as expected, cash flow has a positive impact on the change in the stock of cash only in the case of the smallest firms, which are more likely to be borrowing constrained, and find in the developing economy sample that, as expected, the positive impact of cash flow on the change in the stock of cash declines with firm size. In addition, we find that the cash flow sensitivity of cash declined after the global financial crisis. Finally, we find some evidence that Tobin’s q has a positive impact on the change in the stock of cash.

Keywords: corporate saving; corporate investment; borrowing constraints; liquidity constraints; cash flow; cash holdings; cash flow sensitivity of cash; Tobin’s q; firm size; productivity shocks; Asia; Oriana Database; financial sector development; global financial crisis (search for similar items in EconPapers)
JEL-codes: D92 E21 E22 G11 O53 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2013-10
New Economics Papers: this item is included in nep-mac and nep-sea
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as UPSE Discussion Paper No. 2013-11, October 2013

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http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/715/188 (application/pdf)

Related works:
Journal Article: Corporate Cash Holding in Asia (2014)
Working Paper: Corporate Cash Holding in Asia (2013)
Working Paper: Corporate Cash Holding in Asia (2013)
Working Paper: Corporate Cash Holding in Asia (2013)
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