Natural Disaster And Corporate Cash Holdings

China is one of the few countries in the world seriously damaged by natural disasters.The regional and frequent characteristics of typhoon disaster are helpful to compare the difference of cash holdings between enterprises in disaster-hit areas and those in non-disaster-hit areas.Taking the typhoon disaster as a unique perspective,this paper takes the a-share listed companies in China from 2008–2017 as the sample to empirically explore the impact of natural disasters on corporate cash holdings.The results show that after the typhoon,the cash holdings of the companies in the vicinity of the disaster increased significantly compared with those in other regions unaffected by the typhoon.At the same time,because the typhoon occurred and the adjacent disaster occurred in the developed coastal areas,this paper used the propensity score matching method to match the control group.Secondly,according to the characteristics of typhoon meteorology,typhoon disasters mainly occur in low-latitude areas.This paper takes the latitude of the company registration place as an instrumental variable to mitigate endogenous problems.This paper further finds that the cross-sectional differences of corporate financing constraints,economic policy uncertainty and short-selling pressure affect the effects of typhoon disaster on corporate cash holdings.Under the conditions of low degree of financing constraint,high uncertainty of external economic policy and high short selling pressure of the company,typhoon disaster has a more positive impact on cash holdings.In order to strengthen the robustness of the research results in this paper,a series of tests including parallel trend test of quasi-natural experiment,placebo test,sample replacement and measurement method of explained variables were also conducted.This study provides empirical evidence for the causal relationship between natural disasters and cash holdings.It is of positive significance to further understand the impact of natural disasters on the micro level of the company.