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Firm-Level Political Risk And The Cash Flow Sensitivity Of Cash, Hui Liang James, Hongxia Wang, Nilakshi Borah
Firm-Level Political Risk And The Cash Flow Sensitivity Of Cash, Hui Liang James, Hongxia Wang, Nilakshi Borah
Finance and Economics
We examine the impact of firm-level political risk on the cash flow sensitivity of cash. Using a large sample of U.S. firms from 2003 to 2018, we find that the cash flow sensitivity of cash decreases in political uncertainty and the impact of political risk is asymmetric to cash flow types (positive versus negative). Intensified political uncertainty induces positive/negative cash flow firms to reduce savings out of cash flows to finance investment opportunities/terminate unprofitable projects to retrieve cash. The results are robust to various model specifications, alternative variable definitions, and the control for non-political risks. In addition, we show that …
The Impact Of More Able Managers On Corporate Trade Credit, Hui Liang James, Thanh Ngo, Hongxia Wang
The Impact Of More Able Managers On Corporate Trade Credit, Hui Liang James, Thanh Ngo, Hongxia Wang
Finance and Economics
We investigate how high-ability managers affect trade credit policies of U.S. publicly traded companies from 2003 to 2016. Consistent with the prediction of an “Imbalance of power” in the supply chain, we find that firms with more able managers implement more favorable trade credit policies with both upstream and downstream business partners (i.e., fewer trade credit days in receivables, more trade credit days in payables, and lower net trade credit days), indicating that managerial ability is an important determinant of corporate trade credit. Our cross-sectional analyses provide further support for the bargaining power view of trade credit. The results are …