TY - JOUR
T1 - National culture and corporate cash holdings around the world
AU - Chen, Yangyang
AU - Dou, Paul Y.
AU - Rhee, S. Ghon
AU - Truong, Cameron
AU - Veeraraghavan, Madhu
PY - 2015/1
Y1 - 2015/1
N2 - This paper examines whether cultural dimensions explain the variation in corporate cash holdings around the world as well as within the United States. We establish four major findings. First, in an international setting, corporate cash holdings are negatively associated with individualism and positively associated with uncertainty-avoidance. Second, individualism and uncertainty avoidance influence the precautionary motive for holding cash. Third, firms in individualistic states in the United States hold less cash than firms in collectivistic states. Fourth, we show that individualism is positively related to the firm's capital expenditures, acquisitions, and repurchases while uncertainty avoidance is negatively related. Our findings remain unchanged after controlling for governance factors, firm attributes, and country characteristics.
AB - This paper examines whether cultural dimensions explain the variation in corporate cash holdings around the world as well as within the United States. We establish four major findings. First, in an international setting, corporate cash holdings are negatively associated with individualism and positively associated with uncertainty-avoidance. Second, individualism and uncertainty avoidance influence the precautionary motive for holding cash. Third, firms in individualistic states in the United States hold less cash than firms in collectivistic states. Fourth, we show that individualism is positively related to the firm's capital expenditures, acquisitions, and repurchases while uncertainty avoidance is negatively related. Our findings remain unchanged after controlling for governance factors, firm attributes, and country characteristics.
KW - Cash holdings
KW - National culture
KW - Individualism
KW - Uncertainty avoidance
UR - http://www.scopus.com/inward/record.url?scp=84910035323&partnerID=8YFLogxK
U2 - 10.1016/j.jbankfin.2014.09.018
DO - 10.1016/j.jbankfin.2014.09.018
M3 - Article
VL - 50
SP - 1
EP - 18
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
SN - 0378-4266
ER -