Economic policy uncertainty and corporate cash policy: International evidence

By Xiao Li. Journal of Accounting and Public Policy, 2019

119 citations recorded by the source corpus.

Abstract I investigate the influences of economic policy uncertainty on corporate cash policy. The findings show that there is a positive association between economic policy uncertainty and cash holdings, as well as the propensity to save cash out of operating cash flow. Further analyses suggests that economic policy uncertainty affects corporate cash policy by influencing firms’ precautionary saving motives and the effect is larger when firms have difficulty in raising external finance. Using the new index developed by Baker et al. (2016), I extend the literature on economic policy uncertainty and show that it is an important macro-level factor in influencing corporate cash policy.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/5d7b691c39c748989e146d1dff42a0193dd7e278

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Citations in the corpus

The pandemic and economic policy uncertainty (2020, background): “Im, Park, and Zhao (2017) demonstrate that uncertainty significantly impacts a firm's cash holdings and dividends; under high uncertainty, firms hold more cash (Li, 2019).”
Green credit policy and firm performance: What we learn from China (2021, background): “For instance, leverage ratio and capital intensity are negatively correlated with firm performance (Weng and Chen, 2017; Li and Jin, 2021).”