How do firms learn? Evidence from corporate cash holdings during the COVID‐19 pandemic
Year: 2022
Type: article
Abstract: We examine the impact of COVID‐19 on US corporate cash holdings. Our findings suggest that greater pandemic exposure is associated with higher corporate cash holdings and that firms learn from prior experiences as they manage their cash policies. More specifically, the level of cash holdings in firms that experienced severe financial constraints during the 2008 credit crisis and firms with prior severe acute respiratory syndrome (SARS) and H1N1 exposure is significantly lower than that of firms with no prior epidemic or financial constraints experience. Overall, our findings support the learning behaviour of cash and contribute to corporate cash holdings literature by providing insights on the extent to which firms learn from prior experiences to manage their liquidity.
Source: Accounting and Finance
DOI: 10.1111/acfi.13031
Authors: Bishal BC, Thuy Simpson
Institution: Grand Valley State University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W4313304583