Multinational firms and cash holdings: Evidence from China

• Main Authors: WU, Weijun, YANG, Yang, ZHOU, Sili
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2017
• Subjects: Cash holdings; Multinationals; SOEs; China; Asian Studies; Corporate Finance; International Business
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/5319; https://ink.library.smu.edu.sg/context/lkcsb_research/article/6318/viewcontent/1_s20_S1544612316301805_main.pdf
• Institution: Singapore Management University

To adapt to globalization, Chinese multinational firms have more exploitation of cash. This paper shows that Chinese multinational corporations (MNCs) do not hold significantly more cash relative to domestic firms unless these multinationals heavily relay on the foreign sales. In addition, the multinationals of non-State-Owned Enterprises (Non-SOEs) exhibit the insignificant difference in cash holdings for non-multinationals. We also find that Chinese MNCs invest more but are less profitable, especially in non-SOE subsample. Overall, we conclude that the need of cash liquidity of multinational corporations in China is different from those in U.S.