Cash Holdings and Firm-Level Exposure to Epidemic Diseases

Tut, Daniel (2021): Cash Holdings and Firm-Level Exposure to Epidemic Diseases.

Abstract

We study the effects of firm-level exposure to an epidemic disease on corporate cash holdings amongst U.S firms. Using a text-based measure of firm-level exposure to epidemic diseases and difference-in-difference estimation strategy, we document a positive relationship between the onset of an epidemic disease and corporate cash holdings. We find that, amongst all the recent epidemics, COVID-19 has the strongest impact on cash holdings and that this effect is mostly driven by negative sentiments around the COVID-19 pandemic.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cash, COVID-19, SARS, H1N1, Ebola, Zika, Epidemics, Epidemiology, Virus, Pandemic, Liquid assets, Liquidity management
• Subjects: G - Financial Economics > G0 - General > G00 - General; G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General; G - Financial Economics > G3 - Corporate Finance and Governance > G31 - Capital Budgeting ; Fixed Investment and Inventory Studies ; Capacity; G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation; I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets

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