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Do paid maternity leave mandates affect corporate cash holdings?

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  • Gao, Shangyi
  • Cheong, Chee Seng
  • Zurbruegg, Ralf

Abstract

This study examines whether paid maternity leave laws affect corporate cash holdings. Using a difference-in-differences approach, we find the staggered introduction of these laws significantly reduce firm cash reserves, especially in labor-intensive industries. Further analysis indicates that increased employee productivity post-adoption associates with declining cash holdings, representing a channel linking these laws to precautionary savings motives.

Suggested Citation

  • Gao, Shangyi & Cheong, Chee Seng & Zurbruegg, Ralf, 2024. "Do paid maternity leave mandates affect corporate cash holdings?," Economics Letters, Elsevier, vol. 236(C).
    • Handle: RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524001010
    DOI: 10.1016/j.econlet.2024.111618
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    References listed on IDEAS

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    1. Opler, Tim & Pinkowitz, Lee & Stulz, Rene & Williamson, Rohan, 1999. "The determinants and implications of corporate cash holdings," Journal of Financial Economics, Elsevier, vol. 52(1), pages 3-46, April.
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    4. Lawrence M. Berger & Jane Waldfogel, 2004. "Maternity leave and the employment of new mothers in the United States," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 331-349, June.
    5. Pinka Chatterji & Sara Markowitz & Jeanne Brooks-Gunn, 2011. "Early Maternal Employment and Family Wellbeing," NBER Working Papers 17212, National Bureau of Economic Research, Inc.
    6. Andrea Bassanini & Danielle Venn, 2008. "The Impact of Labour Market Policies on Productivity in OECD Countries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 17, pages 3-15, Fall.
    7. Elena Rey & Andreas Kyriacou & José I. Silva, 2021. "Maternity leave and female labor force participation: evidence from 159 countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 803-824, July.
    8. Devos, Erik & Rahman, Shofiqur, 2018. "Labor unemployment insurance and firm cash holdings," Journal of Corporate Finance, Elsevier, vol. 49(C), pages 15-31.
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