发帖
雷达卡
Nianhang Xua, Qinyuan Chenb, Yan Xuc, Kam C. Chand
a School of Business, Renmin University of China, Beijing 100872, China
b School of Business, Renmin University of China, Beijing 100872, China
c School of Business, Renmin University of China, Beijing 100872, China
d Department of Finance, Gordon Ford College of Business, Western Kentucky University, Bowling Green, KY
42101, USA
Abstract
We examine the relation between political uncertainty and cash holdings for firms in China. We
document that, during the first year of a new city government official’s appointment, a firm, on
average, holds less cash, which is consistent with the grabbing hand hypothesis of politician. Our
results are robust to alternative measures of cash holdings, instrumental variable estimation,
sub-samples without firms in four major cities, a matched sample approach, and placebo tests. In
addition, our additional analyses suggest that a firm holds significantly less cash if: (a) the newly
appointed official is from a different city relative to that from the same city, (b) it faces high
political extraction risk, and (c) it has strong twin agency conflicts. Lastly, our extended results
suggest that the market value of cash holdings is significantly negative during periods of political
uncertainty and firms hide their cash by moving it to related firms via related party transactions
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