Do Local Protestant Values Affect Corporate Cash Holdings?

TY - JOUR

T1 - Do Local Protestant Values Affect Corporate Cash Holdings?

AU - Hu, Huajing

AU - Lian, Yili

AU - Zhou, Wencang

PY - 2019/1/15

Y1 - 2019/1/15

N2 - This study examines how local Protestant belief, as one type of social norms, affects corporate cash policies. We find that firms located in areas with more Protestants hold less cash reserves. The influence of local Protestant belief on cash holdings is more profound for firms with weak corporate governance and firms with one geographic segment. In addition, we find that the difference in cash deployment is reflected in the difference in firms’ investment and payout policies. Overall, our study shows that local Protestant belief is an important factor in determining corporate cash policies and helps to mitigate the potential free cash flow problem.

AB - This study examines how local Protestant belief, as one type of social norms, affects corporate cash policies. We find that firms located in areas with more Protestants hold less cash reserves. The influence of local Protestant belief on cash holdings is more profound for firms with weak corporate governance and firms with one geographic segment. In addition, we find that the difference in cash deployment is reflected in the difference in firms’ investment and payout policies. Overall, our study shows that local Protestant belief is an important factor in determining corporate cash policies and helps to mitigate the potential free cash flow problem.

KW - Cash policy

KW - Corporate cash holdings

KW - Corporate governance

KW - Protestant

KW - Religion

UR - http://www.scopus.com/inward/record.url?scp=85012879313&partnerID=8YFLogxK

U2 - https://doi.org/10.1007/s10551-017-3462-1

DO - https://doi.org/10.1007/s10551-017-3462-1

M3 - Article

SN - 0167-4544

VL - 154

SP - 147

EP - 166

JO - Journal of Business Ethics

JF - Journal of Business Ethics

IS - 1

ER -