Foreign ownership, state ownership and cash holdings under the global financial crisis: evidence from the emerging market of Vietnam

• Published in: International journal of emerging markets Vol. 18; no. 9; pp. 3354 - 3369
• Main Authors: Nguyen Thi, Quynh Nga, Tran, Quoc Trung, Doan, Hong Phat
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Publishing Limited 14.11.2023; Emerald Group Publishing Limited
• Subjects: Bailouts; Budgets; Cash management; Corporate governance; Dummy; Economic crisis; Emerging markets; International finance; Investments; Ownership; Reserve requirements; Stockholders; Vietnam; G32; G34; State ownership; Cash holdings; Emerging market; Foreign ownership; Financial crisis
• ISSN: 1746-8809; 1746-8817
• DOI: 10.1108/IJOEM-03-2020-0303

PurposeThis paper investigates how the global financial crisis changes the effects of state ownership and foreign ownership on corporate cash holdings in an emerging market.Design/methodology/approachWe employ an interactive term between state ownership (foreign ownership) and a crisis dummy to analyze how the global financial crisis determines the effect of state ownership (foreign ownership) on corporate cash holdings.FindingsWith a research sample including 5,493 observations from 621 listed firms over the period 2007–2017, we find that state ownership (foreign ownership) is negatively (positively) related to corporate cash holdings and the effect of state ownership (foreign ownership) is stronger (weaker) during the crisis period. Moreover, the increase in the effect of state ownership is larger in financially unconstrained firms.Originality/valuePrior research shows that the effects of state ownership and foreign ownership on corporate cash holdings in emerging markets are still debatable. This paper extends this line of research by investigating how the global financial crisis – an exogenous shock – changes these effects.