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The role of labor in cash holdings: Evidence from the supply-side impact of COVID-19

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  • Bae, Jaewan
  • Kang, Jangkoo

Abstract

This study investigates the dynamics of corporate cash holdings. We argue that firms in industries with low remote work feasibility have more incentives to hold cash during COVID-19 because of a precautionary saving motive or to retain their employees. The analysis results consistently show that firms less able to transition to remote work maintain higher cash holdings during COVID-19, and, more importantly, this effect is stronger for firms with more employees. Furthermore, we find that a higher share of female workers is associated more strongly with high levels of cash holdings for firms with low remote work capacity during COVID-19.

Suggested Citation

  • Bae, Jaewan & Kang, Jangkoo, 2023. "The role of labor in cash holdings: Evidence from the supply-side impact of COVID-19," Economics Letters, Elsevier, vol. 224(C).
    • Handle: RePEc:eee:ecolet:v:224:y:2023:i:c:s0165176523000599
    DOI: 10.1016/j.econlet.2023.111034
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    References listed on IDEAS

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    1. Thomas W. Bates & Kathleen M. Kahle & René M. Stulz, 2009. "Why Do U.S. Firms Hold So Much More Cash than They Used To?," Journal of Finance, American Finance Association, vol. 64(5), pages 1985-2021, October.
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    More about this item

    Keywords

    Cash holdings; COVID-19; Remote work; Labor; Female workers;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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