Is cash the panacea of the COVID-19 pandemic: Evidence from corporate performance.
Financ Res Lett
; 45: 102151, 2022 Mar.
Article
in English
| MEDLINE | ID: covidwho-1242983
ABSTRACT
This study investigates the impact of COVID-19 crisis on corporate investment and financing policies. Using a difference-in-difference approach, I find while firms suffer from a real negative shock from the pandemic on average, firms with an abundant cash reserve prior to the crisis outperform firms without. Consistent with the precautionary motive behind corporate cash holdings, this paper demonstrates the effect of cash holdings is meaningful to mitigate adverse effect of the aggregate market. My finding also highlights the difficulty in estimating the optimal cash level when rare market condition is considered.
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International databases
Database:
MEDLINE
Language:
English
Journal:
Financ Res Lett
Year:
2022
Document Type:
Article
Affiliation country:
J.frl.2021.102151
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