Economic Cycle, Uncertainty of Economic Policy and Cash Holding of Listed Companies

摘要

Based on the systematic review and economic analysis of the theoretical literature, we consider not only the impact of the economic cycle or the economic policy uncertainty (EPU) on the cash holding ratio, but also the comprehensive impact of the two on the cash holding rate. We raise the research hypothesis by using the data from 2004-2015 in the A-share listed companies which are listed in Shanghai and Shenzhen securities exchange as research samples. The empirical results show that: 1) There are respectively negative correlation between the economic cycle and the cash holding of listed companies, and positive correlation between the EPU and the cash holding . 2) During the boom, the cash holdings are significantly positive with the current EPU and the last stage; during the recession, the cash holdings of listed companies is significantly negatively correlated with the current EPU, while positive with the last stage. 3) We further examine the role of the economic cycle and the EPU on the cash holding value, and find that EPU will reduce the cash holding value. 4) When the economy is booming, the increase in EPU will reduce the market value of corporate cash holdings, but it is not significant. During recession, the increase in EPU will increase the market value of cash holdings.