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Local official turnover, ownership, and firm cash holdings: Insights from an emerging market

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  • Xiaoran Ni

Abstract

Using a hand‐collected dataset of city‐level local official turnover in China, I find that average cash holdings of listed firms decrease significantly upon turnover of city heads, and this effect concentrates in privately owned enterprises. Such effects are more pronounced in firms located in cities with lower government quality. I also find that local official turnover leads to decreases in equity issuance for privately owned enterprises but not for state‐owned enterprises, which largely explains our primary findings. Overall, this paper reveals that the cash policy of privately owned enterprises is sensitive to local official turnover in an emerging market.

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  • Xiaoran Ni, 2019. "Local official turnover, ownership, and firm cash holdings: Insights from an emerging market," European Financial Management, European Financial Management Association, vol. 25(4), pages 1013-1046, September.
    • Handle: RePEc:bla:eufman:v:25:y:2019:i:4:p:1013-1046
    DOI: 10.1111/eufm.12194
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    Cited by:

    1. Jianqiao Huang & Yunsen Chen & Xin Dai & Xiaoran Ni, 2022. "Stock market liberalisation and corporate cash holdings: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(S1), pages 1925-1955, April.
    2. Aibai, Abuduwali & Peng, Yuchao & Shen, Peiyi & Xu, Hongmei, 2022. "Can local policy uncertainty curtail corporate speculation on financial assets?," International Review of Financial Analysis, Elsevier, vol. 83(C).
    3. Cai, Weixing & Hu, Feng & Xu, Fangming & Zheng, Liyi, 2022. "Anti-corruption campaign and corporate cash holdings: Evidence from China," Emerging Markets Review, Elsevier, vol. 51(PA).
    4. Ruiqian Li & Guanghua Xu & Ramakrishnan Ramanathan, 2022. "The impact of environmental investments on green innovation: An integration of factors that increase or decrease uncertainty," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3388-3405, November.
    5. Harris, Oneil & Nguyen, Trung, 2022. "Director co-option and future market share growth," The North American Journal of Economics and Finance, Elsevier, vol. 62(C).

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