Political culture and corporate cash holdings

Chih-Huei Banks (), Huajing Hu () and Katarzyna Platt ()
Additional contact information
Chih-Huei Banks: University of New Mexico, Anderson School of Management, 1 University of New Mexico
Huajing Hu: Adelphi University, Robert B.Willumstad School of Business
Katarzyna Platt: SUNY College at Old Westbury, School of Business

Journal of Economics and Finance, 2023, vol. 47, issue 3, No 1, 563 pages

Abstract: Abstract Do political beliefs matter for corporate cash-holding behavior? In this paper, we analyze whether the political preferences of managers affect their cash holdings. Using a composite political index to measure corporate political culture, we find that firms with Republican-leaning managers hold significantly less cash than firms managed by Democrats. We attribute the lower-level cash holdings of Republican firms to more conservative corporate policies, indicated by lower risk exposure, lower R&D expenditure, lower capital investment, and higher profitability. Our results survive various robustness tests, such as state-fixed effects and IV tests.

Keywords: Political Culture; Cash Policy; Corporate Cash Holdings; Corporate Governance (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s12197-023-09636-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:jecfin:v:47:y:2023:i:3:d:10.1007_s12197-023-09636-9

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-023-09636-9

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().