Country risk, global uncertainty, and firms' cash holdings: Do the role of law, culture, and financial market development matter?

To the extent of our knowledge, there is a gap in scrutinizing the impacts of the country's risk and global uncertainty on Asian firms' cash holdings. Therefore, this work aims to shed light on this gap by choosing 989 listed non-financial Asian firms and performing both the static (fixed-effects) and dynamic (Difference-GMM and System-GMM) panel data methods between 2008 and 2020. The findings reveal that an increase in a country's risk and global uncertainty stimulates firms to stockpile more cash though the impact of country risk is more pronounced. Likewise, the results underscore that among the country risk factors, firms have more precautionary motives to stockpile more cash with increases in financial and political instability while they hold more cash with rises in economic stability. Remarkably, the results emphasize that the impacts of country risk and global uncertainty on cash holdings are more prominent in environments characterized by common-law legal origin, high uncertainty avoidance cultures, and less financial market development. Moreover, the results reveal that firm-specific factors including growth opportunity, leverage, profitability, dividend, and size have an important role in shaping Asian firms' cash holdings policy.

Does economic policy uncertainty impact firms' capital structure policy? Evidence from Western European economies.

This study specifically investigates the impact of economic policy uncertainty (EPU) on travel and leisure (TL) companies' debt holdings policy. To the best of our knowledge, there is a momentous gap in exclusively conducting the impact of EPU on the debt holdings policy behavior of Western European firms operating in the TL sector and its sub-sectors, namely the airlines, gambling, hotels, recreational services, restaurants and bars, and travel and tourism. In this sector, external financing is strongly needed to finance enormous investments and replace, expand, and modernize tangible and intangible assets. To fill the gap, the present study selects 92 publicly listed TL companies operating in Western Europe's top tourist destinations, namely, the UK, Germany, France, Spain, and Italy, and performs both the static and dynamic panel data estimation approaches during the 2005-2019 period. The results reveal that the EPU negatively impacts TL firms' debt holdings, implying that firms tend to decline in debt levels by rising EPU. Consequently, the results highlight that the level of EPU matters, and firms' debt ratios are relatively lower in countries having a higher EPU and vice versa. Besides, the results underscore that the EPU negatively impacts firms' debt holdings in each sub-sector; however, the negative effect is most prominent on the debt ratios of the firms, particularly those operating in gambling, hotels, travel, and tourism, and also recreational services sub-sectors. The results are robust and have important suggestions for regulatory bodies, policymakers, and firms' managers.