Anti-corruption Campaign And Corporate Cash Holdings

The anti-corruption campaign implemented in 2012 in China has been the focus of fimancial studies since its launch.This study investigates how the campaign affects cash holdings policies of firms.Using a sample of listed Chinese firms between 2007 and 2016,empirical evidence indicates a signifieant decrease in cash holdings levels after the campaign.Further analysis suggests that corporate cash holdings decrease more in state-controlled companies(SOEs)than in private-controlled companies(POEs).In addition,this study finds a more pronounced reduction in corporate cash holdings for firms with more financial constraints.Lastly,this study shows that firms with less investment opportunities decrease more in their cash holdings.Overall,this study's findings suggest that the anti-corruption campaign significantly reduces managerial incentives to hold cash,which,in turn,results in a significant decrease in corporate cash holdings.