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Does the Antimonopoly Law improve companies’ cash-holding management efficiency? Empirical evidence from Chinese listed companies

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  • Zhao, Yiyun

Abstract

Using listed firms’ data between 2004 and 2011, we find that China's Antimonopoly Law provokes a significant increase in firms’ cash-holding management efficiency; that is, cash holdings are more aligned with firms’ investment opportunities. We show that the increase in cash-holding management efficiency is more pronounced in less competitive industries and these increases are mainly driven by unrestricted industries. Financial constraint is an important channel through which competitive pressure would impact the cash-holding management efficiency. Our results are robust to different sample period selections and proxies for cash holding and investment opportunity.

Suggested Citation

  • Zhao, Yiyun, 2023. "Does the Antimonopoly Law improve companies’ cash-holding management efficiency? Empirical evidence from Chinese listed companies," Finance Research Letters, Elsevier, vol. 55(PB).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pb:s1544612323003252
    DOI: 10.1016/j.frl.2023.103953
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    More about this item

    Keywords

    Antimonopoly law; Cash-holding management efficiency; Internal liquidity management;
    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
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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