National culture and corporate cash holdings around the world

Yangyang Chen, Paul Y. Dou, S. Ghon Rhee, Cameron Truong, Madhu Veeraraghavan

Research output: Journal article publicationJournal articleAcademic researchpeer-review

196 Citations (Scopus)


This paper examines whether cultural dimensions explain the variation in corporate cash holdings around the world as well as within the United States. We establish four major findings. First, in an international setting, corporate cash holdings are negatively associated with individualism and positively associated with uncertainty-avoidance. Second, individualism and uncertainty avoidance influence the precautionary motive for holding cash. Third, firms in individualistic states in the United States hold less cash than firms in collectivistic states. Fourth, we show that individualism is positively related to the firm's capital expenditures, acquisitions, and repurchases while uncertainty avoidance is negatively related. Our findings remain unchanged after controlling for governance factors, firm attributes, and country characteristics.
Original languageEnglish
Pages (from-to)1-18
Number of pages18
JournalJournal of Banking and Finance
Publication statusPublished - 1 Jan 2015
Externally publishedYes


  • Cash holdings
  • Individualism
  • National culture
  • Uncertainty avoidance

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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