The Cash Flow Sensitivity of Cash Revisited: Evidence from COVID-19

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Friday 31 March 2023

02:00 PM - 03:00 PM



Event details

This event will use evidence from COVID-19 to re-examine the cash flow sensitvity of cash.


Exploiting a truly exogenous shock to cash flows, we re-examine the cash flow sensitivity of cash. We find a strong and significant positive cash flow sensitivity of cash. The effects are more pronounced for firms that suffer more severely from operational difficulties. In contrast, we do not find evidence for the argument of precautionary motive of future investment, agency cost, and information asymmetry. Overall, our findings suggest that firms have an incentive to hold more cash to avoid operational difficulties, particularly when they face severely adverse cash flow shocks.


Dr Jun Wang is an assistant professor in finance in Coventry University at present. His research areas include corporate finance and corporate governance, mainly focusing on Chinese listed firms in China. Regarding the area of corporate finance, it mainly focuses on financial constraints, corporate investment, and equity offering etc. Regarding the area of Corporate Governance, it mainly focuses on ownership structure (particularly multiple large shareholders structure) and board structure etc. Dr Jun Wang also do some research in the area of tax avoidance in accounting.