Do corrupt practices lead to increased cash holdings in firms? International evidence

Rajabrata Banerjee, Kartick Gupta, Hien Duc Han and Chandrasekhar Krishnamurti

Pacific-Basin Finance Journal, 2025, vol. 93, issue C

Abstract: Using cross-country firm-level data from 36 countries, we find that corrupt practices are associated with higher cash holdings. Further analysis suggests that corrupt firms are more constrained financially, motivating them to hold more cash. Our cross-country findings indicate that the positive association between corrupt business practices and corporate cash holdings is more pronounced in contexts characterized by higher institutional quality and greater market orientation. Moreover, our evidence also suggests that corrupt behaviors and high cash holdings are more prominent among young firms and those with high capital expenditure and market to book ratio. Our results survive endogeneity tests and are robust to the use of alternate models and measures.

Keywords: Corrupt practices; Cash holdings; Financial constraints (search for similar items in EconPapers)
JEL-codes: G12 G15 G18 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X25002458
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:pacfin:v:93:y:2025:i:c:s0927538x25002458

DOI: 10.1016/j.pacfin.2025.102908

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().