The impact of internationalization degree on cash levels: Evidence from Latin America |
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| Institution: | 1. School of Economics, Business Administration and Accounting in Ribeirão Preto (FEA-RP), University of São Paulo (USP), Brazil;2. Department of Accounting, School of Economics, Business Administration and Accounting in Ribeirão Preto (FEA-RP), University of São Paulo (USP), Av. dos Bandeirantes, 3900, FEA-RP, ZIP, 14040-905 Ribeirão Preto, São Paulo, Brazil;1. UCP – Universidade Católica Portuguesa – Porto, Rua Diogo Botelho, 1372, Porto 4169-005, Portugal;2. ESPM – Escola Superior de Propaganda e Marketing, Rua Dr. Álvaro Alvim, 123, São Paulo, SP 04018-010, Brazil;1. School of Management, Xi’an Jiaotong University, 28 West Xianning Road, Xi’an 710049, China;2. Jindal School of Management, University of Texas at Dallas, 800 West Campbell Road, SM 43, Richardson, TX 75080, USA;1. Université Paris-Saclay, UVSQ, IAE de Versailles, Larequoi, 47, boulevard Vauban, 78047, Guyancourt Cedex, France;2. Université Côte d’Azur, IAE Nice, GRM, 5, rue du 22ème B.C.A., 06357, Nice Cedex 4, France;3. Lappeenranta-Lahti University of Technology (LUT), School of Business and Management, P.O. Box 20, 53851, Lappeenranta, Finland;1. University of North Carolina at Greensboro, P.O. Box 26170, Greensboro, NC 27402, USA;2. Florida International University, Modesto A. Maidique Campus, 11200 S.W. 8th St., Miami, FL 33199, USA;3. Erasmus University, 3000 DR Rotterdam, The Netherlands;4. Siena College, 515 Loudon Road, Loudonville, NY 12211, USA;5. East Carolina University, 3132 Bate Building, Greenville, NC 27858, USA;1. IMT Business School, Dubai;2. School of Business and Economics, Loughborough University, United Kingdom;1. School of Business and Economics, Loughborough University, LE11 3TT, United Kingdom;2. University of Strathclyde, G1 1XQ, United Kingdom;3. Kwame Nkrumah University of Science & Technology, University Post O?ce, Kumasi, Ghana; Gordon Institute of Business Science, University of Pretoria, 26 Melville Rd, Illovo, Johannesburg, 2196, South Africa |
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| Abstract: | Although cash management has been extensively studied, the cash policies of multinational corporations (MNCs) outside of the U.S. market have been underexplored. We fill this gap in the literature by comparing the cash policies of MNCs to those of non-MNCs in a Latin American setting (Argentina, Brazil, Chile, Colombia, Mexico and Peru). Using different proxies for multinationality, we find evidence that the cash holdings of multilatinas are significantly higher than those of their domestic counterparts. Overall, given that foreign markets may offer the best investment opportunities for many MNCs, our results are consistent with the argument that multilatinas maintain higher cash levels to take advantage of the greater growth opportunities abroad. We contribute to the literature on cash management and international business by expanding knowledge regarding the efforts of MNCs in emerging markets. Our results hold following a series of robustness checks and endogeneity concerns. |
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| Keywords: | Cash holdings Multinationals Emerging markets Multilatinas |
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