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Corporate Cash Holding in Asia |
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| Authors: | Charles Yuji Horioka Akiko Terada‐Hagiwara |
| Institution: | 1. Asian Growth Research Institute, 11‐4 Ohtemachi, Kokurakita‐ku, , Kitakyushu City, Fukuoka Prefecture, 803‐0814 Japan;2. School of Economics, University of the Philippines, Diliman, , Quezon City, Philippines;3. Institute of Social and Economic Research, Osaka University, , Ibaraki, Osaka, Japan;4. National Bureau of Economic Research, , Cambridge, Massachusetts, USA;5. Economics and Research Department, Asian Development Bank, , Metro Manila, 1550 Philippines |
| Abstract: | In this paper, we analyze the determinants of corporate saving in the form of changes in cash holdings for 11 Asian economies using firm‐level data from the Oriana Database for the 2002–2011 period. We find some evidence that cash flow has a positive impact on the change in cash holdings (i.e. that the cash flow sensitivity of cash is positive) and that the positive impact of cash flow on the change in cash holdings is larger and more significant in the case of smaller and presumably more constrained firms than in the case of larger and presumably less constrained firms in both developed and developing economies. Both of these findings corroborate the importance of financial constraints in Asian firms. In addition, we find that the cash flow sensitivity of cash declined after the global financial crisis and that Tobin's q has a positive impact on the change in cash holdings, especially in the case of larger and presumably unconstrained firms. |
| Keywords: | Asia borrowing constraints cash flow cash flow sensitivity of cash cash holdings corporate investment corporate saving financial constraints firm size global financial crisis liquidity management Tobin's q Oriana Database D22 D92 E21 E22 G11 G32 O16 O53 |