Cash holdings in the US healthcare industry: Do different types of uncertainty matter?

Omar Fikrat Fateh Tarzibash, Hasan Ozyapici and Cahit Adaoglu

Finance Research Letters, 2025, vol. 72, issue C

Abstract: This study examines the effects of economic policy uncertainty, categorical economic policy uncertainties, and pandemic uncertainty on the cash holdings of firms operating in the US healthcare industry. The SYS-GMM methodology is applied for 466 firms from 2001 to 2022. The results show that all uncertainties positively affect cash holdings contemporaneously, albeit at different magnitudes. Monetary policy, healthcare policy, and fiscal policy uncertainties are the most influential uncertainties, supporting the financial frictions and real options theories. Controlling for the severity of the pandemic over time, pandemic uncertainty has a positive contemporaneous effect and a negative lagged effect on cash holdings.

Keywords: Cash holdings; Economic policy uncertainty; Categorical economic policy uncertainty; Pandemic uncertainty; Financial frictions; Real options; Healthcare industry (search for similar items in EconPapers)
JEL-codes: D81 G32 G38 I11 M4 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015496

DOI: 10.1016/j.frl.2024.106520

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