Social capital and corporate cash holdings
MetadataShow full item record
© 2017 Elsevier Inc. In this paper we investigate the impact of regional social capital on corporate cash holdings. We also examine the possible channels through which social capital may affect cash holdings. Using US data, this study shows that firms from a high social capital county hold significantly less cash than firms from a low social capital county. We also confirm that social capital reduces cash holdings via the financial constraints and financial reporting quality channels, while it increases cash holdings via the systematic and idiosyncratic risk channels. Additional analysis reveals that, the effect of social capital on cash holdings is more pronounced for less geographically dispersed firms. These results are robust to alternative specifications of cash holdings and social capital, and to the use of a two-stage least squares (2SLS) analysis to alleviate the endogeneity concern. Overall, our findings suggest that regional social capital plays an important role in determining corporate cash holdings.
Showing items related by title, author, creator and subject.
Cheung, Adrian (2016)We identify three channels and the corresponding mechanisms through which corporate social responsibility (CSR) may affect corporate cash holdings. CSR firms are expected to have relatively low cash holdings because they ...
Xu, Yan (2009)Current research on corporate cash holdings is set within the contemporary corporate cash-holding conceptual framework established by Opler et al. (1999), which consist of the static trade-off theory, the pecking-order ...
Curry, George; Koczberski, Gina (2001)Over the past century the cultural and physical landscape of the Shire of Denmark on the south coast of Western Australia has been transformed by successive waves of in-migrants. The paper examines the period since the ...