Anti-corruption Campaign and Corporate Cash Holdings: Evidence from China

Weixing Cai*, Feng Hu*, Fangming Xu*, Liyi Zheng*

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

15 Citations (Scopus)
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This paper investigates the impact of anti-corruption efforts on firms’ cash holdings using detailed hand-collected data on the downfall of corrupt politicians in China from 2010 to 2015. We find that firms increase cash holdings after their local political leaders are investigated for political corruption. The effect is less prominent for firms with more investment and growth opportunities, and the anti-corruption measures increase the value relevance of cash. Results are robust to a battery of tests. Overall, our results reveal the causal relationship between anti- corruption efforts and firms’ cash policy and support the precautionary effect of cash holdings.
Original languageEnglish
Article number100843
Number of pages22
JournalEmerging Markets Review
Early online date23 Aug 2021
Publication statusE-pub ahead of print - 23 Aug 2021

Structured keywords

  • AF Financial Markets
  • AF Corporate Finance


  • Anti-corruption
  • corporate cash holdings
  • precautionary effect


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