Economic uncertainty and corporate cash holdings: Evidence from Taiwan

Chien-Wen Yang, Yi-Shan Hsieh and Chih-Yuan Hung

The North American Journal of Economics and Finance, 2024, vol. 73, issue C

Abstract: We utilize data from publicly listed firms and unlisted entities in Taiwan spanning the period from 1990 to 2020 to investigate the impact of global, Asia-Pacific, China, or Taiwan’s economic uncertainty on firm cash reserves within a small open economy. Our empirical findings indicate that, as economic uncertainty increases, Taiwanese firms demonstrate a tendency to increase their cash holdings, particularly those reliant on exports. Smaller and unlisted export-oriented firms encounter greater challenges in fund management, thereby leading to an augmentation in their cash reserves. Conversely, enterprises primarily focused on domestic sales exhibit a diminished response to uncertainty, with the exception of smaller listed companies that marginally raise their cash holdings. These results illuminate the influence of financing constraints, export reliance, and various uncertainties on decisions pertaining to cash holdings. Furthermore, the study underscores the dependence of Taiwanese firms on trade and emphasizes the impact of external economic uncertainty on their decision-making process.

Keywords: Cash holdings; Economic uncertainty; Financing constraints; Export sales (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062940824001086
Full text for ScienceDirect subscribers only

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:eee:ecofin:v:73:y:2024:i:c:s1062940824001086

DOI: 10.1016/j.najef.2024.102183

Access Statistics for this article

The North American Journal of Economics and Finance is currently edited by Hamid Beladi

More articles in The North American Journal of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().