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Firm-level political risk, liquidity management, and managerial attributes

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  • Jeon, Chunmi
  • Mun, Seongjae
  • Han, Seung Hun

Abstract

This study examines how firm-level political risk (FLPR) relates to excess cash holding and cash value. Managerial ability and psychological confidence are examined as moderators of these relationships. FLPR is measured by a computational linguistic analysis of firm conference call manuscripts. The findings indicate that FLPR has a positive (negative) relationship to excess cash (cash value) and that the managerial ability and CEO overconfidence of managers have a negative (positive) moderating effect on excess cash holdings (cash value). Robustness tests show consistent results using national-level policy uncertainty and alternative empirical models.

Suggested Citation

  • Jeon, Chunmi & Mun, Seongjae & Han, Seung Hun, 2022. "Firm-level political risk, liquidity management, and managerial attributes," International Review of Financial Analysis, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:finana:v:83:y:2022:i:c:s1057521922002411
    DOI: 10.1016/j.irfa.2022.102285
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    2. Wang, Liang, 2023. "Mitigating firm-level political risk in China: The role of multiple large shareholders," Economics Letters, Elsevier, vol. 222(C).
    3. Lee, Eugenia Y. & Ha, Wonsuk, 2023. "Electronic voting in shareholder meetings and the market value of cash holdings," International Review of Financial Analysis, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    Firm-level political risk; Cash holding; Cash value; CEO overconfidence; Managerial ability;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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