Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

Xin Su, Shengshi Zhou, Rui Xue, Jinfang Tian*

*Corresponding author for this work

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Using China as the research setting, this paper investigates the relationship between economic policy uncertainty and corporate precautionary cash holdings. Empirical results show a U-shaped relation between economic policy uncertainty and corporate precautionary cash holdings. Empirical analysis, in terms of ownership structure, firm size, corporate competitiveness and geographical location, further shows that (i) the effects for economic policy uncertainty in both state-owned and non-state-owned enterprises are significant, but the effect is stronger for state-owned enterprises; (ii) such significant effect is also found more strongly in small and medium-sized enterprises and highly competitive enterprises; and (iii) the effects for eastern, central and western China are all statistically significant, but the effect is strongest for eastern China.

Original languageEnglish
Pages (from-to)4567-4592
Number of pages26
JournalAccounting & Finance
Volume60
Issue number5
Early online date9 Jul 2020
DOIs
Publication statusPublished - Dec 2020

Keywords

  • Corporate competitiveness
  • Economic policy uncertainty
  • Firm size
  • Ownership structure
  • Precautionary cash holdings
  • Regional analysis

Fingerprint Dive into the research topics of 'Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China'. Together they form a unique fingerprint.

Cite this