State ownership, information asymmetry and cash holding: Impact of COVID-19 on Chinese-listed firms

Danni Yu; Weini Soh; Bany Ariffi Amin Noordin; Mohamed Hisham Yahya; Badar Latif

doi:10.3389/fpsyg.2022.1052979

State ownership, information asymmetry and cash holding: Impact of COVID-19 on Chinese-listed firms

Front Psychol. 2022 Nov 29:13:1052979. doi: 10.3389/fpsyg.2022.1052979. eCollection 2022.

Authors

Danni Yu^{1

2}, Weini Soh², Bany Ariffi Amin Noordin², Mohamed Hisham Yahya², Badar Latif²

Affiliations

¹ Department of International Education, Shandong Youth University of Political Science, Jinan, China.
² Department of Accounting and Finance, University of Putra Malaysia, Seri Kembangan, Malaysia.

Abstract

This study investigates the relationship between information asymmetry and cash holdings under the impact of the coronavirus disease 2019 (COVID-19) in China. It likewise explores how state ownership dominates their nexus, particularly during the pandemic. COVID-19 caused increases in cash holdings, and that the information asymmetry's effect on cash holdings is more pronounced over the COVID-19 period. Additionally, information asymmetry has a weaker effect on corporate cash holdings for state-owned enterprises (SOEs) under the pandemic. Overall, the study shows that state ownership moderates information asymmetry's impact on cash holdings and softens firms' precautionary motive for cash holdings during the pandemic.

Keywords: COVID-19; China; cash holdings; corporate governance; information asymmetry; state ownership.