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The cash-holding link within the supply chain

Author

Listed:
  • Tri Tri Nguyen

    (University of Brighton)

  • Manh Cuong Nguyen

    (University of Westminster
    Ho Chi Minh City Open University)

  • Hung Quang Bui

    (University of Economics Ho Chi Minh City)

  • Tuyet Nhung Vu

    (Loughborough University)

Abstract

Using a customer–supplier matched sample of US-listed firms from 1980 to 2016, we study the corporate cash-holding relationship between suppliers and their major customers. The key findings suggest that the cash-holding levels of suppliers are positively affected by those of their major customers, consistent with the liquidity argument. The effects are more pronounced when the major customers are in more favourable financial conditions and when they are considered more important to their suppliers. Our results are robust to various endogeneity problems and additional tests. Taken together, these results bring forth an important corporate cash-holding link within the supply chain.

Suggested Citation

  • Tri Tri Nguyen & Manh Cuong Nguyen & Hung Quang Bui & Tuyet Nhung Vu, 2021. "The cash-holding link within the supply chain," Review of Quantitative Finance and Accounting, Springer, vol. 57(4), pages 1309-1344, November.
    • Handle: RePEc:kap:rqfnac:v:57:y:2021:i:4:d:10.1007_s11156-021-00979-0
    DOI: 10.1007/s11156-021-00979-0
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    More about this item

    Keywords

    Cash holdings; Customer–supplier relationships; Supply chain;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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