Domestic Economic Policy Uncertainty, US Macroeconomic Uncertainty and Corporate Cash Holdings: International Evidence

Jiunn-Shyan Khong, Swee-Sim Foong () and Chee-Wooi Hooy ()
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Jiunn-Shyan Khong: Faculty of Accountancy, Finance & Business, Tunku Abdul Rahman University of Management and Technology; School of Management, Universiti Sains Malaysia
Swee-Sim Foong: School of Distance Education, Universiti Sains Malaysia
Chee-Wooi Hooy: School of Management, Universiti Sains Malaysia

Malaysian Journal of Economic Studies, 2025, vol. 62, issue 1, 49-77

Abstract: This study examines the impact of two different types of uncertainty, which are domestic economic policy uncertainty and macroeconomic uncertainty stemming from the United States (US) on corporate cash holdings. Using a sample of 18 countries from 2003 to 2023, we find that both types of uncertainty positively associated with corporate cash holdings due to precautionary motives. Our results demonstrate that the US macroeconomic uncertainty has a greater influence over domestic economic policy uncertainty on corporate cash holdings decision. Further analysis indicates that the influences of both types of uncertainty on corporate cash holdings are more pronounced in developed countries.

Keywords: Corporate cash holdings; domestic economic policy uncertainty; precautionary motives; US macroeconomic uncertainty (search for similar items in EconPapers)
JEL-codes: E3 E44 E6 G18 G32 G38 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:mjr:journl:v:62:y:2025:i:1:p:49-77

DOI: 10.22452/MJES.vol62no1.3

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