The role of labor in cash holdings: Evidence from the supply-side impact of COVID-19

Jaewan Bae and Jangkoo Kang

Economics Letters, 2023, vol. 224, issue C

Abstract: This study investigates the dynamics of corporate cash holdings. We argue that firms in industries with low remote work feasibility have more incentives to hold cash during COVID-19 because of a precautionary saving motive or to retain their employees. The analysis results consistently show that firms less able to transition to remote work maintain higher cash holdings during COVID-19, and, more importantly, this effect is stronger for firms with more employees. Furthermore, we find that a higher share of female workers is associated more strongly with high levels of cash holdings for firms with low remote work capacity during COVID-19.

Keywords: Cash holdings; COVID-19; Remote work; Labor; Female workers (search for similar items in EconPapers)
JEL-codes: E00 G32 J16 J20 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:224:y:2023:i:c:s0165176523000599

DOI: 10.1016/j.econlet.2023.111034

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