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No cash hoarding under storms: The pushback effect of growth opportunities

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  • To, Bao Cong Nguyen

Abstract

This study investigates how firms adjust their cash holdings and investment decisions in response to storm shocks, emphasizing the moderating role of growth opportunities as part of firms’ strategic adaptation to disasters. Using a sample of Vietnamese listed firms observed over the period 2013–2023, the study provides new insights into firm behavior under climate-related stress. While prior literature suggests that firms tend to hoard cash during disasters, evidence from Vietnam—a country frequently exposed to storms—shows that firms significantly decrease cash holdings. This can be explained by a mechanism in which firms with higher Tobin’s Q increase capital expenditures, reflecting perceived growth opportunities that remain viable even during storms, an effect often referred to as the “pushback effect”. Overall, the findings indicate that firms adapt proactively to predictable climate risks, with growth opportunities serving as a key driver of corporate policy decisions.

Suggested Citation

  • To, Bao Cong Nguyen, 2025. "No cash hoarding under storms: The pushback effect of growth opportunities," Finance Research Letters, Elsevier, vol. 86(PB).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pb:s1544612325017209
    DOI: 10.1016/j.frl.2025.108466
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    Keywords

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    JEL classification:

    • 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
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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