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How Do Corporate Sustainability And Pandemic Affect Cash Holdings In Muslim Countries?

Author

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  • Hasan Tekin

    (Karabuk University, Turkiye)

  • Huseyin Burgazoglu

    (Sakarya University, Turkiye)

Abstract

We investigate how corporate sustainability (Environmental, Social, and Governance-ESG) influences cash holdings of non-financial firms in Muslim countries from 2003 to 2021. Using panel models, we find that firms with lower ESG hold more cash over the entire period, which aligns with the agency and precautionary motives of cash holdings. We also note that the negative relation between ESG and cash holding is not affected by the COVID-19 pandemic. Looking at individual countries in the sample, we note a positive relation between ESG and cash balances for Saudi Arabia. Meanwhile, similar to the full sample, their relation is negative for firms from Malaysia and Turkiye. Finally, the ESG and cash policies of firms in different industries tend to vary. Overall, firms in Muslim countries use cash holdings as a substitute for corporate sustainability without any changes in the COVID era.

Suggested Citation

  • Hasan Tekin & Huseyin Burgazoglu, 2022. "How Do Corporate Sustainability And Pandemic Affect Cash Holdings In Muslim Countries?," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 8(4), pages 615-636, December.
    • Handle: RePEc:idn:jimfjn:v:8:y:2022:i:4g:p:615-636
    DOI: https://doi.org/10.21098/jimf.v8i4.1649
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    More about this item

    Keywords

    Cash management; Covid; Disclosure; ESG; Islamic;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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