IDEAS home Printed from https://ideas.repec.org/a/taf/raaexx/v29y2022i2p363-385.html
   My bibliography  Save this article

Impact of economic policy uncertainty on cash holdings: firm-level evidence from an emerging market

Author

Listed:
  • Xunan Feng
  • Y. Ling Lo
  • Kam C. Chan

Abstract

We examine how economic policy uncertainty (EPU) affects firms’ cash holdings and how such changes in cash holdings affect firm value and capital investment in China. Our findings suggest that firms that increase their cash holdings during high EPU have higher firm values and are less negatively impacted by the underinvestment problem. When a firm is non-state-owned, financially constrained, or is located in a province with low marketization, the impact of EPU on cash holdings is amplified. Furthermore, state-owned enterprises (SOEs) are less likely to increase cash holdings during elevated EPU, and consequently tend to have lower firm values.

Suggested Citation

  • Xunan Feng & Y. Ling Lo & Kam C. Chan, 2022. "Impact of economic policy uncertainty on cash holdings: firm-level evidence from an emerging market," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 29(2), pages 363-385, March.
  • Handle: RePEc:taf:raaexx:v:29:y:2022:i:2:p:363-385
    DOI: 10.1080/16081625.2019.1694954
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/16081625.2019.1694954
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/16081625.2019.1694954?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gutiérrez-López, Cristina & Castro, Paula & Tascón, María T., 2022. "How can firms' transition to a low-carbon economy affect the distance to default?," Research in International Business and Finance, Elsevier, vol. 62(C).
    2. Nusair, Salah A. & Olson, Dennis & Al-Khasawneh, Jamal A., 2024. "Asymmetric effects of economic policy uncertainty on demand for money in developed countries," The Journal of Economic Asymmetries, Elsevier, vol. 29(C).
    3. Xuan Yang & Shihao Mao & Luxuan Sun & Chao Feng & Yinshuang Xia, 2022. "The Effect of Economic Policy Uncertainty on Green Technology Innovation: Evidence from China’s Enterprises," Sustainability, MDPI, vol. 14(18), pages 1-17, September.
    4. Xiaohong Xian & Xiang Zhang & Zongyi Zhang & Stavros Sindakis & Sakshi Aggarwal, 2024. "Cash Holdings Trends Influenced by Market Competitiveness: Evidence from the Chinese Stock Market," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8767-8796, June.
    5. Yang, Chien-Wen & Hsieh, Yi-Shan & Hung, Chih-Yuan, 2024. "Economic uncertainty and corporate cash holdings: Evidence from Taiwan," The North American Journal of Economics and Finance, Elsevier, vol. 73(C).
    6. Wang, Kai-Hua & Liu, Lu & Zhong, Yifan & Lobonţ, Oana-Ramona, 2022. "Economic policy uncertainty and carbon emission trading market: A China's perspective," Energy Economics, Elsevier, vol. 115(C).
    7. Fangnan Cui & Yue Tan & Bangwen Lu, 2024. "How Do Macroeconomic Cycles and Government Policies Influence Cash Holdings? Evidence from Listed Firms in China," Sustainability, MDPI, vol. 16(18), pages 1-15, September.
    8. Li, Zheng Zheng & Su, Chi-Wei & Moldovan, Nicoleta-Claudia & Umar, Muhammad, 2023. "Energy consumption within policy uncertainty: Considering the climate and economic factors," Renewable Energy, Elsevier, vol. 208(C), pages 567-576.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:raaexx:v:29:y:2022:i:2:p:363-385. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/raae20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.