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Cash Holdings and Firm-Level Exposure to Epidemic Diseases

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  • Tut, Daniel

Abstract

We study the effects of firm-level exposure to an epidemic disease on corporate cash holdings amongst U.S firms. Using a text-based measure of firm-level exposure to epidemic diseases and difference-in-difference estimation strategy, we document a positive relationship between the onset of an epidemic disease and corporate cash holdings. We find that, amongst all the recent epidemics, COVID-19 has the strongest impact on cash holdings and that this effect is mostly driven by negative sentiments around the COVID-19 pandemic.

Suggested Citation

  • Tut, Daniel, 2021. "Cash Holdings and Firm-Level Exposure to Epidemic Diseases," MPRA Paper 109704, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109704
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    More about this item

    Keywords

    Cash; COVID-19; SARS; H1N1; Ebola; Zika; Epidemics; Epidemiology; Virus; Pandemic; Liquid assets; Liquidity management;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • 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
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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