Policy uncertainty and firm cash holdings

Hieu V. Phan, Nam H. Nguyen, Hien T. Nguyen and Shantaram Hegde

Journal of Business Research, 2019, vol. 95, issue C, 71-82

Abstract: This research examines the relation between government economic policy uncertainty and firm cash holdings. We find evidence that policy uncertainty is positively related to firm cash holdings due to firms' precautionary motives and, to a lesser extent, investment delays. The relation between policy uncertainty and cash holdings is more pronounced for firms dependent on government spending and extends beyond business cyclicality. Further analysis indicates that the effects of policy uncertainty on corporate cash holdings are distinct from those of political, market, or other macroeconomic uncertainty.

Keywords: Policy uncertainty; Cash holdings; Precautionary motives; Financial constraints (search for similar items in EconPapers)
JEL-codes: G18 G32 G38 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (164)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:95:y:2019:i:c:p:71-82

DOI: 10.1016/j.jbusres.2018.10.001

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