Navigating through Political Risk in Vietnam: The Role of Corporate Cash Holdings

2021 ◽  
pp. 1-15
Author(s):  
Anh-Tuan Le ◽  
Thao Phuong Tran
Keyword(s):  
Cash Holdings ◽  
Political Risk ◽  
Corporate Cash Holdings

The impact of institutional factors on corporate mechanism of cash adjustment – New evidence from emerging Asia

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Santanu Das ◽  
Ashish Kumar ◽  
Asit Bhattacharyya
Keyword(s):  
Financial Development ◽  
Cash Holdings ◽  
Content Type ◽  
Adjustment Mechanism ◽  
Management Policies ◽  
New Evidence ◽  
Corporate Cash Holdings ◽  
Adjustment Dynamics ◽  
Country Specific

PurposeThe purpose of this study is to understand how the business environment of a country has an impact on cash management policies of the firms and also to investigate if there is any asymmetry in cash adjustment dynamics when a firm deviates from its long-term target of cash holdings.Design/methodology/approachUsing a sample of seven emerging Asian countries in the period 2001–2019, the authors investigate the role of country specific variables in the corporate cash holdings and their cash adjustment mechanism. They use the panel data regression method to estimate the results.FindingsThe authors find that the overall financial development of a country has a significant impact on corporate cash holdings and cash adjustment dynamics. When a firm has excess cash, the speed of adjustment towards the target is faster as compared to when it has deficit cash holdings. Further, when a firm holds excess cash, it adjusts towards the target using cash from investments; in case of deficit cash holdings, the adjustment happens via cash from financing activities.Practical implicationsThe results of the study are helpful to corporate managers as these are important references to them to understand and design cash management policies by considering factors that are measured at the country level. It also provides them a clearer understanding about the role of corporate board and information asymmetry in cash holdings.Originality/valueThis is the first study which examines the role of country-specific variables on corporate cash holdings and their adjustment mechanism of firms in emerging Asia. Further, the study extends the literature by providing new evidence that there is asymmetry in cash adjustment dynamics of firms after controlling for the overall financial development of a country.

State Ownership and Corporate Cash Holdings

2018 ◽  
Vol 53 (5) ◽  
pp. 2293-2334 ◽  
Author(s):  
Ruiyuan (Ryan) Chen ◽  
Sadok El Ghoul ◽  
Omrane Guedhami ◽  
Robert Nash
Keyword(s):  
Cash Holdings ◽  
State Ownership ◽  
Country Level ◽  
Value Of Cash ◽  
Privatized Firms ◽  
New Evidence ◽  
Corporate Cash Holdings ◽  
Robust Evidence ◽  
Insight Into

Using a unique sample of newly privatized firms from 59 countries, this article provides new evidence about the agency costs of state ownership and new insight into the corporate governance role of country-level institutions. Consistent with agency theory, we find strong and robust evidence that state ownership is positively related to corporate cash holdings. Moreover, we find that the strength of country-level institutions affects the relation between state ownership and the value of cash holdings. In particular, as state ownership increases, markets discount the value of cash holdings more in countries with weaker institutions.

Net Operating Loss Carryforwards and Corporate Savings Policies

2021 ◽  
Author(s):  
Shane M Heitzman ◽  
Rebecca Lester
Keyword(s):  
Cash Holdings ◽  
Financial Policy ◽  
Tax Rate ◽  
Policy Responses ◽  
Tax Returns ◽  
Corporate Financial Policy ◽  
Tax Loss ◽  
Corporate Cash Holdings ◽  
Loss Firms

We examine the relation between corporate cash holdings and tax net operating loss carryforwards (NOLs). The literature demonstrates that firms should distribute cash to shareholders rather than retain it and generate passive investment income taxed at both corporate and investor levels. However, if the firm's tax rate on passive income is lower than shareholders'-as when the firm has NOLs-theory also shows that the firm should retain cash and invest on the shareholders' behalf. Consistent with this, we find that NOLs are associated with higher levels of savings; firms save an additional $0.12 to $0.17 per dollar of tax-effected NOL benefit. Furthermore, investors place a higher value on corporate cash in tax loss firms, consistent with NOLs increasing the after-tax returns on passive investments. The paper adds to the literature studying corporate financial policy responses to taxation and quantifies the role of NOLs in corporate savings decisions.

Sales order backlog and corporate cash holdings

2020 ◽  
Vol 28 (3) ◽  
pp. 351-371
Author(s):  
Kailing Deng ◽  
Linda Nichols ◽  
Li Sun
Keyword(s):  
Corporate Governance ◽  
Performance Indicator ◽  
Cash Holdings ◽  
Content Type ◽  
Precautionary Motive ◽  
Research Questions ◽  
The Impact ◽  
The Relationship ◽  
Corporate Cash Holdings

PurposeWe examine the impact of sales order backlog (an important leading performance indicator) on corporate cash holdings and the role of corporate governance in the relation between sales order backlog and cash holdings.Design/methodology/approachWe use the regression analysis to examine our research questions.FindingsConsistent with the agency motive and the precautionary motive of cash holdings, we document a significant negative relation between order backlog and cash, suggesting that firms with higher order backlog hold less cash. We further examine and find that the relationship between order backlog and cash becomes stronger for firms with stronger corporate governance, highlighting the role of governance in determining the level of corporate cash holdings.Originality/valueOur study contributes to the accounting literature on sales order backlog and the finance literature on corporate cash holdings. In particular, our study contributes to developing a more comprehensive understanding of the sales order backlog because it is still an under-researched area in accounting. To the best of our knowledge, this study is perhaps the first empirical study that examines the direct link between order backlog and cash.

scholarly journals COVID-19 IS DEADLY! LONG LIVE THE KING, CORPORATE CASH HOLDINGS!

2021 ◽  
Vol 10 ◽  
pp. 78-92
Author(s):  
Akanksha Saxena ◽  
Ranajee ◽  
Ms Saumita Roy
Keyword(s):  
Stress Level ◽  
Negative Impact ◽  
Cash Holdings ◽  
Cash Flows ◽  
Human Race ◽  
Significant Negative Impact ◽  
The Impact ◽  
Corporate Cash Holdings

Covid-19 has adversely affected the human race. With human race confined to their houses, the level of consumption has gone down and it has significant negative impact on the cash flows of the existing businesses. In this study, using different scenarios and stress level, we try to predict the impact on businesses cash flows and establish the role of corporate cash holdings in avoiding illiquidity of businesses.

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