Economic policy uncertainty and cash holdings: Evidence from BRIC countries |
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| Affiliation: | 1. Istanbul Medeniyet University, Ünalan Mah. Ünalan Sok., D-100 Karayolu Yanyol, 34700, Üsküdar, İstanbul, Turkey;2. Istanbul Technical University (ITU), Macka 34367, Istanbul, Turkey;1. University of International Business and Economics, China;2. Beijing Foreign Studies University, China;3. Cardiff University, UK;4. Faculty of Business and Economics, University of Hong Kong, Hong Kong;1. School of Business, Renmin University of China, Beijing 100872, China;2. Department of Finance, Gordon Ford College of Business, Western Kentucky University, Bowling Green, KY 42101, USA |
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| Abstract: | This paper examines the effect of Economic Policy Uncertainty (EPU) on cash holding decisions of firms in BRIC countries. Our focus is on the firms in BRIC countries, a particularly interesting group of countries to consider given their increasingly important role in the world economy. By using firm-level data through the 10 years period of 2006–2015, we find that firms prefer to hold more cash when uncertainty increases after controlling for firm level variables with industry and year fixed effects. The results are robust to alternative control variables, EPU calculations and selection of sub-samples. In addition to the country specific EPU levels, global EPU also has a significant positive impact on corporate cash holdings. |
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