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International Corporate Cash Holdings and Firm-Level Exposure to COVID-19: Do Cultural Dimensions Matter?

Author

Listed:
  • Khanh Hoang

    (School of Banking and Finance, National Economics University, Dong Tam, Hanoi 11616, Vietnam)

  • Cuong Nguyen

    (Department of Financial and Business Systems, Lincoln University, Lincoln 7647, Canterbury, New Zealand)

  • Dung Viet Tran

    (State Bank of Vietnam, 49 Ly Thai To, Hoan Kiem, Hanoi 11007, Vietnam)

  • Anh Phan

    (Banking Academy of Vietnam, Dong Da, Hanoi 11514, Vietnam)

Abstract

This study investigates the impact of COVID-19 exposure on corporate cash holdings using firm data across sixteen developing and developed economies. The results show that firms reserve more cash when their exposure to COVID-19 increases. We also find a cash burn effect during the COVID-19 pandemic, meaning that the cash holdings are drained when firm exposure to the pandemic exceeds a tipping point. The effect is more pronounced in larger firms and firms with less cash reserve. Further analyses reveal that the cash burn effect tends to be stronger in countries with a high level of individualism and weaker in countries with high levels of risk aversion, masculinity, and long-term orientation. The findings provide fresh insights into the connections among corporate cash holdings, national cultures, and firm-level exposure to COVID-19.

Suggested Citation

  • Khanh Hoang & Cuong Nguyen & Dung Viet Tran & Anh Phan, 2022. "International Corporate Cash Holdings and Firm-Level Exposure to COVID-19: Do Cultural Dimensions Matter?," JRFM, MDPI, vol. 15(6), pages 1-14, June.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:6:p:262-:d:835267
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    References listed on IDEAS

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    1. Fatima Saleh Abd Almajeed Al-Hamshary & Akmalia M. Ariff & Khairul Anuar Kamarudin & Norakma Abd Majid, 2023. "Corporate Risk-Taking and Cash Holdings: The Moderating Effect of Investor Protection," Capital Markets Review, Malaysian Finance Association, vol. 31(1), pages 1-23.

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