Corporate precautionary savings: Evidence from the recent financial crisis

Sun, Zhenzhen; Wang, Yaping

doi:10.1016/j.qref.2014.09.006

Cited by 22 publications

(11 citation statements)

References 23 publications

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“…Furthermore, firms increase cash during economic crises, consistent with the precautionary prediction that cash is accumulated when uncertainties heighten. this finding is in line with very recent research focused on the relation of cash in US firms and the global financial crisis (refer to Bliss et al 2015;Sun and Wang 2014;Garcia-appendini andMontoriol-Garriga 2013). We also find that the relationship of bank loans, a liquidity-credit supply proxy, and cash is negative.…”

Section: Discussionsupporting

confidence: 92%

“…Bliss et al (2015) show that the shock to the supply of credit during the recent financial crisis increased the marginal benefit of cash retention in firms. Sun and Wang (2014) examine the effects of the financial crisis on cash holdings and saving propensities and find that firms tended to save more as a precautionary motive during the crisis. Kahle and Stulz (2013) find that bank-dependent firms hoard cash during the crisis compared to unlevered firms.…”

Section: 23mentioning

confidence: 99%

See 1 more Smart Citation

Corporate Cash Holdings and Economic Crises in Mexico

Trejo‐Pech

Noguera

Gunderson

2016

Financial Deepening and Post-Crisis Development in Emerging Markets

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Section: Discussionsupporting

confidence: 92%

Section: 23mentioning

confidence: 99%

Corporate Cash Holdings and Economic Crises in Mexico

Trejo‐Pech

Noguera

Gunderson

2016

Financial Deepening and Post-Crisis Development in Emerging Markets

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“…Precautionary cash holdings (Precs). We combine Almeida et al's (2004) and Sun and Wang's (2015) measurement to construct the dependent variable:…”

Section: Methodsmentioning

confidence: 99%

Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

Zhou

Xue

et al. 2020

Accounting & Finance

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Using China as the research setting, this paper investigates the relationship between economic policy uncertainty and corporate precautionary cash holdings. Empirical results show a U‐shaped relation between economic policy uncertainty and corporate precautionary cash holdings. Empirical analysis, in terms of ownership structure, firm size, corporate competitiveness and geographical location, further shows that (i) the effects for economic policy uncertainty in both state‐owned and non‐state‐owned enterprises are significant, but the effect is stronger for state‐owned enterprises; (ii) such significant effect is also found more strongly in small and medium‐sized enterprises and highly competitive enterprises; and (iii) the effects for eastern, central and western China are all statistically significant, but the effect is strongest for eastern China.

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“…Notes 1. Examples of this literature also include Jensen (1986); Dittmar and Mahrt Smith (2007), Harford et al (2008) and Sun and Wang (2015).…”

Section: Discussionmentioning

confidence: 99%

Corporate cash savings and discretionary accruals

Jia

Shao

Sun

et al. 2020

CFRI

Self Cite

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PurposeThis paper assesses how discretionary accruals (DAs) affect corporate cash savings policies and the motivation behind this cash saving behavior and, also whether the linkage between DAs and cash saving affect the market-perceived cash value.Design/methodology/approachWe construct the measure of DAs using the previous five-year average information to investigate the association of DAs with the change in cash. Moreover, the Faulkender and Wang (2006) methodology is utilized to examine the market-perceived cash value in DAs.FindingsThe key finding is that firms with high DAs save significantly more cash. A one standard deviation increase in DAs saves cash by 12.59%. Furthermore, the value of cash is low for these firms. The effect is stronger in firms with poor governance but not present in financially constrained firms.Research limitations/implicationsThe empirical evidence highlights DAs have negative effect on market-perceived cash value, which underscores the insight that managers manage earnings opportunistically using DAs.Originality/valueTaken together, we provide more evidence on the literature of accruals in earnings manipulation.

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Corporate precautionary savings: Evidence from the recent financial crisis

Cited by 22 publications

References 23 publications

Corporate Cash Holdings and Economic Crises in Mexico

Corporate Cash Holdings and Economic Crises in Mexico

Does economic policy uncertainty raise corporate precautionary cash holdings? Evidence from China

Corporate cash savings and discretionary accruals

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