Anti-corruption campaign and corporate cash holdings: Evidence from China

Weixing Cai, Feng Hu, Fangming Xu and Liyi Zheng

Emerging Markets Review, 2022, vol. 51, issue PA

Abstract: This paper investigates the impact of anti-corruption efforts on firms' cash holdings using detailed hand-collected data on the downfall of corrupt politicians in China from 2010 to 2015. We find that firms increase cash holdings after their local political leaders are investigated for political corruption. The effect is less prominent for firms with more investment and growth opportunities, and the anti-corruption measures increase the value relevance of cash. Results are robust to a battery of tests. Overall, our results reveal the causal relationship between anti-corruption efforts and firms' cash policy and support the precautionary effect of cash holdings.

Keywords: Anti-corruption; Corporate cash holdings; Precautionary effect (search for similar items in EconPapers)
JEL-codes: D73 G30 G32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1566014121000510
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:ememar:v:51:y:2022:i:pa:s1566014121000510

DOI: 10.1016/j.ememar.2021.100843

Access Statistics for this article

Emerging Markets Review is currently edited by Jonathan A. Batten

More articles in Emerging Markets Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().