Universal Journal of Accounting and Finance Vol. 9(6), pp. 1273 - 1279
DOI: 10.13189/ujaf.2021.090607
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Cash Holdings and Over-Investments during Covid 19 Pandemic: The Evidence from Vietnam


Nhung Thi Tuyet Dao *
Department of Business, Faculty of Language Education and Professional Development, VNU University of Languages and International Studies, Vietnam National University, Hanoi, Vietnam

ABSTRACT

Since the end of 2019, the world has been witnessing a severe Covid 19 pandemic. Right from the beginning, it reveals serious effects on many aspects of the economy. During this period, it is believed that firms tend to reduce their investments and therefore hold more cash to minimize potential risks. By studying 2,868 firm-year observations from non-financial listed firms in Vietnam from 2017 to 2020, this paper examines the impact of Covid 19 pandemic on cash holdings and overinvestment. Furthermore, the paper also makes the comparison between the cash holding level of overinvestment firms and non-overinvestment firms during Covid 19 pandemic. With the panel data, the research uses GLS, fixed effect, GMM and logit models to test appropriate regressions. The findings indicate that firms seem to have a tendency to hoard more cash and also reduce overinvestments during Covid 19 pandemic that are consistent with the theory of precautionary motive. This research further shows that overinvestment firms still reserve less cash than other firms during the pandemic. This paper contributes to the current literature with the investigation of both corporate cash holdings and overinvestment during the Covid 19 pandemic. However, the research time period is only from 2017 to 2020, which might be a limitation of this paper.

KEYWORDS
Cash Holdings, Cash Management, Covid 19 Pandemic, Inefficient Investment, Investment, Overinvestment

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Nhung Thi Tuyet Dao , "Cash Holdings and Over-Investments during Covid 19 Pandemic: The Evidence from Vietnam," Universal Journal of Accounting and Finance, Vol. 9, No. 6, pp. 1273 - 1279, 2021. DOI: 10.13189/ujaf.2021.090607.

(b). APA Format:
Nhung Thi Tuyet Dao (2021). Cash Holdings and Over-Investments during Covid 19 Pandemic: The Evidence from Vietnam. Universal Journal of Accounting and Finance, 9(6), 1273 - 1279. DOI: 10.13189/ujaf.2021.090607.