Corporate Cash Holdings, National Culture, And Multinationality

The authors examine the relations between national cultures, the multinationality of the firm and its holdings of cash. They develop several hypotheses from well known corporate finance theories and theories of the multinational firm, positing that cultural factors as well as the degree of multinationality of firms influence their decisions to hold cash. In particular, firms in countries with high uncertainty avoidance, as a national culture, hold more cash as a way to hedge against undesired states of nature.