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Cash holdings in the US healthcare industry: Do different types of uncertainty matter?

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  • Tarzibash, Omar Fikrat Fateh
  • Ozyapici, Hasan
  • Adaoglu, Cahit

Abstract

This study examines the effects of economic policy uncertainty, categorical economic policy uncertainties, and pandemic uncertainty on the cash holdings of firms operating in the US healthcare industry. The SYS-GMM methodology is applied for 466 firms from 2001 to 2022. The results show that all uncertainties positively affect cash holdings contemporaneously, albeit at different magnitudes. Monetary policy, healthcare policy, and fiscal policy uncertainties are the most influential uncertainties, supporting the financial frictions and real options theories. Controlling for the severity of the pandemic over time, pandemic uncertainty has a positive contemporaneous effect and a negative lagged effect on cash holdings.

Suggested Citation

  • Tarzibash, Omar Fikrat Fateh & Ozyapici, Hasan & Adaoglu, Cahit, 2025. "Cash holdings in the US healthcare industry: Do different types of uncertainty matter?," Finance Research Letters, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015496
    DOI: 10.1016/j.frl.2024.106520
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    More about this item

    Keywords

    Cash holdings; Economic policy uncertainty; Categorical economic policy uncertainty; Pandemic uncertainty; Financial frictions; Real options; Healthcare industry;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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