Corruption and cash holdings: Evidence from emerging market economies

Bhanu Pratap Singh Thakur and M. Kannadhasan

Emerging Markets Review, 2019, vol. 38, issue C, 1-17

Abstract: We examine the effect of corruption on cash holdings and cash value using a panel data set of 4236 firms from 16 emerging market economies. We find that the cash holdings are positively related to the corruption and by managing their cash holdings upwards, the firms can benefit in the corrupt environment by trading cash. Furthermore, cash holding adds value to the firms. However, it is insignificant when the firms are operating in high corruption environment with low investor protection. Overall, the evidence suggests that corruption play an important role in shaping the cash policies of firms in emerging markets.

Keywords: Corruption; Cash holdings; Emerging markets; Value of cash (search for similar items in EconPapers)
JEL-codes: G30 G32 G35 G38 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:38:y:2019:i:c:p:1-17

DOI: 10.1016/j.ememar.2018.11.008

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