Corporate cash holdings under Sino-US trade conflict: evidence from China

This study examines the impact of Sino-US trade conflict on the corporate cash holdings of China's listed foreign-trade companies with sanctioned US business. Employing a DID method, we utilize a sample of 207 foreign-trade companies with sanctioned US business and 832 foreign-trade companies without US business from 2016 to 2019. Our results show that Sino-US trade conflict has stimulated cash holdings in foreign-trade enterprises with sanctioned US business. A large amount of cash holdings exerts a positive effect on corporate performance, especially in poorly performing firms. This relationship is especially pronounced in enterprises with financing constraints and non-state-owned foreign-trade firms.