How optimal cash changed by the global financial crisis? A multi-country analysis

• Hasan Tekin ^[1]
  1. [1] Karabük University

     Karabük University

     Turquía

     
• Localización: Economics and Business Letters, ISSN-e 2254-4380, Vol. 9, Nº. 2, 2020, págs. 114-123
• Idioma: inglés
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• Resumen

  • This article investigates the impact of the global financial crisis 2007-2009 (GFC) as well as financial constraints and governance on optimal cash decisions. Using 14,885 sample firms from eleven countries, empirical results show that constrained firms have a faster cash adjustment than unconstrained firms as confirmed by precautionary motive. Contrary to agency motive, firms in weak-governed countries have a slower cash adjustment than those in well-governed countries before the GFC. However, this picture changes after the GFC. Specifically, they increase their cash adjustments, whereas those in well-governed countries decrease their cash adjustments as supported by agency motive. Overall, optimal cash policy differs following the GFC across financial constraints and governance.