Original scientific paper
https://doi.org/10.1080/1331677X.2023.2183422
Sustainable development in natural resources industry: is geopolitical risk a catalyst for corporate excess cash holdings?
Jingwen Li
Weike Zhang
Feiyang Zhou
Wenjing Wu
Abstract
With the outbreak of the Russia-Ukraine conflict, combined with
the COVID-19 epidemic and the Federal Reserve’s interest rate
hike, geopolitical risks have increased sharply, which has brought
great pressure on the sustainable development of natural resources
industry. This study aims to discuss the impact of geopolitical
risk (GPR) on corporate excess cash holdings in China’s natural
resources industry. The findings suggest that GRP can encourage
enterprises in the natural resources industry to hold more excess
cash. The findings still hold with a suite of robustness tests. The
study also evidences that the above effect is more significant for
state-owned enterprises, enterprises in the mining industry, and
large-scale enterprises. Finally, further results show that with the
increase of GPR, enterprises with strong risk-taking capacity tend
to hold more excess cash, while enterprises registered in higher
market-oriented regions are inclined to retain less excess cash.
These findings can conduce to a deep understanding of the influence
of GPR on corporate excess cash holdings and serve as a reference
for policy-makers to adjust policies.
Keywords
Sustainable development; geopolitical risk; excess cash holdings; natural resources industry
Hrčak ID:
314049
URI
Publication date:
15.5.2023.
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