|
|
|
| The Impact of Industrial Policy Uncertainty on Corporate Cash Holdings：A Natural Experiment Based on the Change of National Five-Year Plan |
| YANG Jie，ZHAN Wenjie，LI Yuee |
| 1.China University of Geosciences, Wuhan, China;2.Huazhong University of Science and Technology, Wuhan, China |
|
|
|
|
Abstract With the periodical change of Five-Year Plan(FYP) during 2008～2017 as natural experiment, we analyze the relationship between industrial policy uncertainty caused by the change of FYP and corporate cash holding. We find that corporates hold more cash in the year of FYP change. The result is robust with the consideration of endogeneity. The increment of cash holding is mainly in the industries more sensitive to policy change. With the approaching of FYP change year, corporates increase cash holding year by year, and decrease cash holding after new FYP is announced. We also find that financial constraint strengthens the positive relationship between industrial policy uncertainty and corporate cash holding. Finally, we find that a part of the increase of cash holding is from the decrease of trade credit provision, which means that the causality between industrial policy uncertainty and corporate cash holding is at the cost of abandoning sales revenue.
|
|
Received: 21 October 2020
|
|
|
|
|
|
|
