Corporate strategy uniqueness and cash holdings

Zhenzhen Sun, Rongrong Zhang and Yifei Li

The Financial Review, 2025, vol. 60, issue 4, 1129-1160

Abstract: This study examines the effect of unique strategies on corporate cash holdings. We find a U‐shaped relationship between strategy uniqueness and cash holdings. When strategy uniqueness is low, the increase in uniqueness enhances a company's competitive advantage, leading to low demand for cash reserves. Conversely, when strategy uniqueness is high, the increase in uniqueness leads to higher information asymmetry, prompting firms to hold more cash to mitigate potential costs. The U‐shaped relationship is stronger for financially constrained firms and those with optimistic managers. Overall, we present a manifestation of the uniqueness paradox in corporate cash‐holding decisions, highlighting the pivotal role played by corporate unique strategies.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/fire.12442

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:60:y:2025:i:4:p:1129-1160

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0732-8516

Access Statistics for this article

The Financial Review is currently edited by Cynthia J. Campbell and Arnold R. Cowan

More articles in The Financial Review from Eastern Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().