Corruption and Corporate Cash Holdings. Issue 5 (9th April 2022)

• Record Type: Journal Article
• Authors: Seo, Dong Wook; Han, Seung Hun
• Is Part Of: Emerging markets finance & trade. Volume 58:Issue 5(2022)
• Page Start: 1441
• Page End: 1455
• Publication Date: 2022-04-09
• Subjects: Cash holdings -- financial policy -- corruption -- emerging markets; G30 -- G32 -- G38 -- F50; Balkan Peninsula -- Commerce -- Periodicals; Balkan Peninsula -- Foreign economic relations -- Periodicals; Europe, Central -- Commerce -- Periodicals; Europe, Central -- Foreign economic relations -- Periodicals; Europe, Eastern -- Commerce -- Periodicals; Europe, Eastern -- Foreign economic relations -- Periodicals; Turkey -- Commerce -- Periodicals; Turkey -- Foreign economic relations -- Periodicals; Asia -- Commerce -- Periodicals; Asia -- Foreign economic relations -- Periodicals; Eurasia -- Commerce -- Periodicals; Eurasia -- Foreign economic relations -- Periodicals; 382.05
• DOI: 10.1080/1540496X.2021.1890022
• Languages: English
• ISSNs: 1540-496X

Abstract

ABSTRACT: In this study, we examine the relation between corruption and corporate cash holding policy using data from 35, 288 firms in 44 countries. The results indicate a non-linear relation between corruption and corporate cash holdings with a negative coefficient of the cubic term of corruption. Specifically, in developed (frontier) countries with low (high) level of corruption, we find a negative relation, whereas in emerging countries with moderate level of economic development and corruption, we find a positive relation. Thus, we suggest that corruption is an important variable that affects corporate cash holding policy by the level of economic development.