Corporate cash holdings and financial crisis: new evidence from an emerging market

Trần, Quốc Trung

doi:10.1007/s40821-019-00134-9

Cited by 21 publications

(30 citation statements)

References 39 publications

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“…First, most studies have discussed the relationship between business cycles and health expenditure in developed countries such as the United States and Europe (4,9), while limited studies have paid attention to this issue in emerging markets (6,20). However, there are some differences between emerging economies and developed economies in political, economic, and cultural aspects (35)(36)(37), and business cycles may have different effects on health expenditure. Second, most studies have discussed the counter-cyclical or pro-cyclical effects of business cycles on health expenditure from the following perspectives, such as medical affordability (6)(7)(8), environmental quality (9-13), universal healthcare (15), aging population (15), and population health (16)(17)(18)(19)(20)(21)(22)(23)(24)(25)(26).…”

Section: Literature Reviewmentioning

confidence: 99%

The Effect of Business Cycles on Health Expenditure: A Story of Income Inequality in China

Zeng

Luo

2021

Front. Public Health

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Using the panel data of 31 regions in China from 2002 to 2018, this study aims to investigate the effect of business cycles on health expenditure from the role of income inequality. We find that health expenditure experiences a change from pro-cyclical to counter-cyclical with business cycles. Specifically, business cycles have a different influence on health expenditure before and after the financial crisis in 2008. Our findings also show that income inequality can moderate the impact of business cycles on health expenditure in China. More importantly, the role of income inequality in the above issue varies from different regions. We conclude that the government should try to take active steps to control health expenditure by decreasing income inequality.

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Section: Literature Reviewmentioning

confidence: 99%

The Effect of Business Cycles on Health Expenditure: A Story of Income Inequality in China

Zeng

Luo

2021

Front. Public Health

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“…They find that both cash holdings and cash-cash flow sensitivity are higher under the impact of a financial crisis. Firms with more cash holdings are more able to avoid bankruptcy and survive under the impact of a financial crisis (Campello et al, 2011;Campello et al, 2010;Lins et al, 2010;Tran, 2019). Therefore, we argue that corporate managers in countries of high uncertainty avoidance culture have stronger precautionary motive and thus their firms tend to hold cash in the post-crisis period.…”

Section: Global Financial Crisisan Exogenous Shockmentioning

confidence: 83%

Uncertainty avoidance culture, cash holdings and financial crisis

Trần

2020

MBR

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Purpose This paper aims to investigate how the global financial crisis affects the relationship between uncertainty avoidance culture and corporate cash holdings. Design/methodology/approach This study develops a research model in which cash holdings ratio is a function of post-crisis period dummy, Hofstede’s cultural dimension of uncertainty avoidance, their interactive term and control variables. The research sample includes 188,264 observations from 26,509 firms incorporated in 44 countries between 2003 and 2016. Findings This study finds that the effect of uncertainty avoidance culture on firm cash holdings is stronger in the post-crisis period from 2008 to 2016. This effect is stronger for financially constrained firms. In addition, the research findings show that uncertainty avoidance culture is more effective in cash–cash flow sensitivity over the post-crisis period. Originality/value Prior studies show that uncertainty avoidance culture positively affects corporate cash reserves. However, the authors only examine the effect of uncertainty avoidance culture on cash holdings in a static environment. This paper investigates this effect under the impact of the global financial crisis – an exogenous shock.

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“…Using a sample of 8,663 observations from 1,435 listed firms in China, they find that firms accumulate more cash during the crisis period. However, Tran (2019a) shows that the global financial crisis reduces Economic policy uncertainty and cash value corporate cash holdings in Vietnam. This can be explained that the amount of cash firms consume is higher than the amount they save due to external financial constraint.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Economic policy uncertainty, value of cash and financial crisis

Trần

2021

EJMBE

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PurposeThis paper investigates the effect of economic policy uncertainty on value of cash before and after the global financial crisis.Design/methodology/approachWe investigate the relationship between economic policy uncertainty and value of excess cash based on the valuation model of Fama and French (1998). Baker et al. (2016) news-based index (BBD index) is employed to calculate measures of economic policy uncertainty. Our research sample includes 103,474 observations from 11,000 firms across 19 countries over the period 2004–2016.FindingsWe find that economic policy uncertainty is negatively “positively” related to value of cash in the pre-crisis “post-crisis” period. Moreover, we also document that the positive effect of economic policy uncertainty in the post-crisis period is stronger in financially constrained firms.Originality/valueWhile prior studies find a relationship between economic policy uncertainty and cash levels or the effect of firm-level uncertainty on value of cash, this paper shows how economic policy uncertainty as an institutional environment factor affects value of cash. Moreover, it documents that economic policy uncertainty has opposite effects on value of cash before and after the global financial crisis.

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Corporate cash holdings and financial crisis: new evidence from an emerging market

Cited by 21 publications

References 39 publications

The Effect of Business Cycles on Health Expenditure: A Story of Income Inequality in China

The Effect of Business Cycles on Health Expenditure: A Story of Income Inequality in China

Uncertainty avoidance culture, cash holdings and financial crisis

Economic policy uncertainty, value of cash and financial crisis

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