Advances in Economics, Management and Political Sciences
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Advances in Economics, Management and Political Sciences
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Information Asymmetry and Firm-level Cash Holdings During COVID-19 Pandemic Period—An Analysis Based on Chinese Listed Companies
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Abstract
Since the COVID-19 occurs from 2020, global economy has a tremendes shrinking in amount and sphere, which brings business objects uncertain financial turbulence. Hence, corporate cash holdings are a concern by managers and investors as it represents the survival ability of companies. This study investigates information asymmetry and corporate cash holdings during COVID-19 pandemic period. After analyzing on large Chinese lised companies sample, we test two opposing hypotheses. According to free cash flow theory, cash flow declines further as the level of information asymmetry rises. However, considering profound event, companies may increase cash holdings for precautionary motive during a long time. As a result, using the difference-in-difference method, this paper finds a positive relationship between information asymmetry and cash holdings, while COVID-19 hurts cash holdings for Chinese listed companies. The robustness test also gains similar results. Overall, the results may support the agency theory and precautionary motives for holding cash.
Keywords
Cash holdings, information asymmetry, COVID-19
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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 3rd International Conference on Business and Policy Studies
- ISBN (Print)
- 978-1-83558-375-3
- ISBN (Online)
- 978-1-83558-376-0
- Published Date
- 18 April 2024
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/76/20241877
- Copyright
- 18 April 2024
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited