Uncertainties and Corporate Cash Holdings Nexus: The Moderating Role of Ownership Structure, Financial Constraints, and Trade Credit

This study examines the influence of three forms of uncertainties (firm-specific, market-based, and economic policy uncertainty) on corporate cash holdings in China, particularly considering the moderating role of firms’ ownership structure, financial constraints, and trade credit. Using an annual panel dataset from 2003 to 2023 of A-share listed manufacturing firms on the Shanghai and Shenzhen Stock exchanges, we find that firm cash holdings are positively affected by all forms of uncertainties. The results further show that private and financially constrained firms are positively, while access to trade credit negatively moderates this nexus. Robustness checks, including alternative measures of cash holdings, fixed effect model, and GMM, confirm the validity of the results. The findings contribute to the corporate finance literature by emphasizing the distinct effects of ownership, financial constraints, and access to trade credit in uncertain economic situations. The results offer valuable insights to managers, policymakers, and investors. JEL Classification: D22, D81, G32