 Corruption and corporate cash holdings: international evidenceJournal of Multinational Financial Management, 2020, vol. 54, issue C Abstract: Although many prior studies document consistently negative effects of corruption on macroeconomic issues, the relationship between corruption and corporate financial decisions is debatable. In this paper, we investigate how corruption environment affects corporate cash holdings. With a sample of 199,333 observations across 46 countries, we find that corruption is positively associated with both cash holdings and the cash flow sensitivity of cash. Robustness tests with a reduced sample without US and Chinese firms, different measures of cash holdings and various regression approaches show that our research findings are stable. We also find that the effects of corruption are stronger if legal protection of shareholders is adequate. In addition, our additional analysis shows that corruption reduces value of cash. This paper shows that bribery motive of cash holdings is consistent around the world and firms tend to balance agency motive and bribery motive in their corporate liquidity management. Keywords: Corruption; Cash holdings; Cash flow; Shareholder protection (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:54:y:2020:i:c:s1042444x1930369x DOI: 10.1016/j.mulfin.2019.100611 Access Statistics for this article Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth More articles in Journal of Multinational Financial Management from Elsevier |
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