Empirical Research on the Relationship between Industry Working Capital Shortfall and Company Cash Holding in the Same Industry

Zhaohua Li, Junyi Jiang, Lijuan Xia, Chien-Chi Chu and Wenyao Zhang

Discrete Dynamics in Nature and Society, 2022, vol. 2022, 1-14

Abstract: Affected by the fluctuation of the market and economic environment during the epidemic period, the capital pressure of companies has increased sharply, which increases the possibility of risk transmission in the same industry and poses new challenges to the operation and financing of companies. From the perspective of preventive motivation of corporate cash holding, we creatively use the industry working capital shortfall as the explanatory variable to construct an Extended Cash Holding Model and a Cash Holding Value Regression Model. Taking the panel data of A-share listed companies in Shanghai and Shenzhen as samples, this paper uses the Classical Linear Regression Model and Fixed Effects Regression Model to study the relationship between industry working capital shortfall and cash holdings in the same industry, as well as the relationship between industry working capital shortfall and cash holding value. The empirical results show that industry working capital shortfall has an important impact on the cash holding level within the same industry, and the cash holding level is significantly and positively correlated with industry working capital shortfall. Moreover, this study also reveals that the industry working capital shortfall has a dual impact on cash holdings. Specifically, the higher the risk of industry working capital shortfall, the lower the value of company cash holdings. The conclusions of this paper not only extend the research on cash holding but also provide support and reference for companies to optimize the cash holding value.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://downloads.hindawi.com/journals/ddns/2022/5146764.pdf (application/pdf)
http://downloads.hindawi.com/journals/ddns/2022/5146764.xml (application/xml)

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:hin:jnddns:5146764

DOI: 10.1155/2022/5146764

Access Statistics for this article

More articles in Discrete Dynamics in Nature and Society from Hindawi
Bibliographic data for series maintained by Mohamed Abdelhakeem ().