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Cultural and macroeconomic determinants of cash holdings management
Author(s) -
Orlova Svetlana V.
Publication year - 2020
Publication title -
journal of international financial management and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.818
H-Index - 37
eISSN - 1467-646X
pISSN - 0954-1314
DOI - 10.1111/jifm.12121
Subject(s) - cash management , corporate governance , cash , index (typography) , cash flow forecasting , agency cost , agency (philosophy) , business , monetary economics , operating cash flow , economics , finance , shareholder , philosophy , epistemology , world wide web , computer science
This study examines patterns in cash management, particularly cash holdings speed of adjustment (CH‐SOA), across 48 countries. I find that managerial cultural characteristics and country‐level macroeconomic factors influence the persistence of cash reserve levels, deviation from target, and the speed with which firms in different countries adjust their cash holdings. The findings support the idea that agency costs as well as market frictions influence CH‐SOA and other aspects of cash management. The findings are robust to the inclusion of a wide range of firm‐level characteristics, country‐level corporate‐governance variables, and an alternative cultural index.