The impact of air pollution on cash holdings of firms in Vietnam

Tóm tắt

Cash holding is an important decision that affects many other choices in
a firm. Previous studies have revealed a range of factors affecting cash
holdings, but little is known about a macro variable: air pollution, which is
quite a pressing issue recently and globally. This study examines the association between air pollution and cash holdings using a sample of listed
firms in Vietnam, a developing country that has a worrisome level of air
pollution. The research sample covers non-financial firms listed on the Vietnam Stock Exchange from 2016 to 2021, retrieved from Thomson Refinitiv. Furthermore, the authors also gather information on air pollution using
the particulate matter measurement index (PM2.5) over the years 2016 to
2021 from the contribution of General Consulate of U.S. in Vietnam. The
current research employs conventional estimation strategies including
OLS, Fixed effects model, and Random effects model. In contrast to previous studies suggesting a positive linkage, we find that air pollution is not
significantly related to cash holdings of firms in Vietnam. This could be due
to the own situations in Vietnam and that air pollution could reduce (risky)
investments. We further find that leverage tends to make air pollution have
a more negative effect on cash holdings for firms in Vietnam. The findings
bring important implications, and are robust to several techniques to ensure the robustness of finding