Cash Holdings along the Supply Chain: The Downstream Evidence

Journal of Economics and Finance - Tập 46 - Trang 452-471 - 2022
Fang Chen1, Jian Huang2, Jianjun Jia3
1Pompea College of Business, University of New Haven, West Haven, USA
2College of Business and Economics, Towson University, Towson, USA
3ShanghaiTech University, Shanghai, China

Tóm tắt

We examine the downstream effect of cash holdings along the supply chain. Using a supplier-customer sample from 1989 to 2009, we find evidence that a supplier’s large cash holdings increase its customers’ demand for cash reserves, suggesting that the negative risk spillover effect dominates the positive trade credit effect from a supplier to its customers. This finding is robust to alternative specifications of Two-Stage Least Squares, and the positive downstream impact on cash holdings is amplified during the financial crisis. We also find that the effect is stronger under the condition of a more substantial risk spillover effect or a weaker trade-credit effect.

Tài liệu tham khảo

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