COVID-19 pandemic and cash holding in consumer goods sector: International evidence
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Irwansyah 
, Muhammad Iqbal Pribadi , Ahmad Roy , Dharma Yanti , Yanzil Azizil Yudaruddin , Rizky Yudaruddin
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
Cash holdings, or the amount of cash and cash equivalents a company holds, become more significant when economic uncertainty increases. Reddaway (1936) argued that cash holdings serve transactional, precautionary, and speculative purposes, underscoring their importance, particularly during economic downturns. This pandemic has encouraged companies to manage their financial resources carefully. This research explores the impact of the COVID-19 pandemic on cash holdings in consumer goods companies across the initial three years of the pandemic. Data were sourced from the Wall Street Journal Database (WSJ), spanning 2018 to 2022. Utilizing the fixed effects model (FEM), the analysis encompasses a dataset of 1.491 companies from 80 countries. The findings indicate a substantial and positive correlation between the COVID-19 pandemic and cash holdings within the consumer goods sector. This effect is pronounced in the first, second, and third years of the pandemic, highlighting companies’ decisions to bolster cash reserves as a response to pandemic-induced uncertainty. This analysis underscores the widespread influence of the COVID-19 pandemic on cash holdings across industries, market types, and geographical regions.
Keywords: COVID-19, Cash Holding, Consumer Goods Sector
Authors’ individual contribution: Conceptualization — I.; Methodology — M.I.P., A.R., Y.A.Y., and R.Y.; Investigation — I., M.I.P., D.Y., and R.Y.; Resources — Y.A.Y. and R.Y.; Data Curation — R.Y.; Writing — Original Draft — M.I.P., A.R., and D.Y.; Writing — Review & Editing — I. and R.Y.; Supervision — I.; Project Administration — M.I.P., A.R., and D.Y.; Funding Acquisition — I.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
JEL Classification: F34, F44, I10
Received: 04.10.2023
Accepted: 26.03.2024
Published online: 28.03.2024
How to cite this paper: Irwansyah, Pribadi, M. I., Roy, A., Yanti, D., Yudaruddin, Y. A., & Yudaruddin, R. (2024). COVID-19 pandemic and cash holding in consumer goods sector: International evidence. Risk Governance and Control: Financial Markets & Institutions, 14(1), 138–149. https://doi.org/10.22495/rgcv14i1p10
