Rajhans, R K (2024) How do economic policy uncertainty and leverage impact firm-level cash holding distribution of housing companies in an emerging economy? A quantile regression approach. Journal of Financial Management of Property and Construction, 29(2), pp. 331-348. ISSN 1366-4387
Abstract
Purpose: High economic policy uncertainty forces firms to accumulate a higher level of cash than during normal business periods. However, it is not evident that economic policy uncertainty has a homogeneous impact across cash-holding distributions. This paper aims to study the impact of economic policy uncertainty, leverage and their interaction on cash-holding distributions. Design/methodology/approach: This study adopted a quantile regression approach to examine the influence of economic policy uncertainty and firm leverage on firm-level cash-holding distributions. To investigate the influence across quantiles, the author estimated 19 quantiles between 0.05 and 0.95. Findings: This study finds that both economic policy uncertainty and firm leverage significantly affect firm-level cash-holding distributions heterogeneously. But, the impact of the interaction of these two variables is significant only for firms placed in the 60th to 85th quantiles of cash holding distribution. Originality/value: The study adds to the existing knowledge of determinants of firm-level cash holdings but takes exogenous variables as economic policy uncertainty. The paper builds on a unique sample setting wherein, the cash holdings of all nonfinancial firms have increased many folds, including housing companies in an emerging economy.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | cash distribution; cash holdings; economic policy uncertainty; firm size; housing firms; leverage; quantile regression |
| Index terms: | housing, methodology, economic policy, determinant, interaction, emerging economy |
| Subjects: | business policy, risk assessment, construction type, behavioral psychology, research methods, economic development |
| Topics: | International Construction, Risk Management, Governance, Construction Technology, Research Practice |
| Descriptive scope: | 3 PCT |
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