Anti-corruption, government intervention, and corporate cash holdings: Evidence from China

Jun Xie and Yifan Zhang

Economic Systems, 2020, vol. 44, issue 1

Abstract: We use China as an example to examine how anti-corruption and government intervention shape corporate cash holding decisions. The findings show that firms in provinces with less government intervention (weak anti-corruption intensity) hold smaller (larger) cash reserves than those in provinces with more government intervention (strong anti-corruption intensity). Furthermore, we find that the positive relationship between government intervention and corporate cash holdings is alleviated as the anti-corruption intensity increases, and this alleviation effect is more prominent for state-owned enterprises (SOEs), firms in high intervention areas and firms without political connections. These findings support the argument that corruption-free and low intervention governments can benefit firms in making more profitable corporate decisions.

Keywords: Anti-corruption; Government intervention; Cash holdings (search for similar items in EconPapers)
JEL-codes: G32 P26 P31 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:44:y:2020:i:1:s0939362518304394

DOI: 10.1016/j.ecosys.2020.100745

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