Corporate Cash Holdings and Financial Crisis: An Empirical Study of Chinese Companies
AbstractThis study investigates the determinants of cash holdings in the period 1999-2009 in China. The sample period covers the time of financial crisis. The focus in this study is on how firm characteristics, especially financial constraints and investment options, are associated with cash holdings. The findings show that: (i) Compared to “normal” times, Chinese firms tend to increase their cash holdings during the financial crisis. (ii) In general, the firms with more financial constrains, and with more investment opportunities, tend to hold more cash. (iii) Further, the firms with lower leverage, less net working capital (NWC), and lower capital expenditures, are more likely to increase their cash holdings as well. Likewise, those firms tend to save more cash from cash flow. (iv) The evidence suggests that Chinese firms are precautious with their cash holdings.
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Bibliographic InfoArticle provided by Eurasia Business and Economics Society in its journal Eurasian Business Review.
Volume (Year): 1 (2011)
Issue (Month): 2 (Fall)
Cash holdings; cash-flow; financial crisis; China;
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- Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
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- Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
- Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
- Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.
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