Corruption and Corporate Cash Holdings

Dong Wook Seo and Seung Hun Han

Emerging Markets Finance and Trade, 2022, vol. 58, issue 5, 1441-1455

Abstract: In this study, we examine the relation between corruption and corporate cash holding policy using data from 35,288 firms in 44 countries. The results indicate a non-linear relation between corruption and corporate cash holdings with a negative coefficient of the cubic term of corruption. Specifically, in developed (frontier) countries with low (high) level of corruption, we find a negative relation, whereas in emerging countries with moderate level of economic development and corruption, we find a positive relation. Thus, we suggest that corruption is an important variable that affects corporate cash holding policy by the level of economic development.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:58:y:2022:i:5:p:1441-1455

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DOI: 10.1080/1540496X.2021.1890022

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