How Does Firm-Specific Investor Sentiment Affect the Value of Corporate Cash Holdings?

Guo, H.; Yin, C.; Zeng, Y.

doi:10.1111/1467-8551.12602

How Does Firm-Specific Investor Sentiment Affect the Value of Corporate Cash Holdings?

Guo, H.; Yin, C.; Zeng, Y.

Authors

Dr Haifeng Guo haifeng.guo@durham.ac.uk
Assistant Professor

C. Yin

Dr Yeqin Zeng yeqin.zeng@durham.ac.uk
Associate Professor

Abstract

We document a positive relation between firm-specific investor sentiment (FSIS) and the value of cash. We also show that FSIS has a stronger positive effect on the value of cash than the value of other types of assets, suggesting that our finding is not a simple reflection of firm-level overvaluation. Our finding is robust to alternative measures of change in cash, different cash regimes, FSIS measured by order imbalance, news sentiment, and the tone of earnings conference call transcripts, and controlling for market-wide sentiment, institutional monitoring, corporate governance, and endogeneity. Cross-sectional analyses suggest that the positive relation between FSIS and the value of cash is stronger for firms with better future growth opportunities, larger investment, more innovation activities, higher information asymmetry, and more liquid stocks. Overall, our paper sheds light on the important role of FSIS in corporate outcomes.

Citation

Guo, H., Yin, C., & Zeng, Y. (2023). How Does Firm-Specific Investor Sentiment Affect the Value of Corporate Cash Holdings?. British Journal of Management, 34(1), 410-441. https://doi.org/10.1111/1467-8551.12602

Journal Article Type	Article
Acceptance Date	Jan 31, 2022
Online Publication Date	Feb 24, 2022
Publication Date	2023-01
Deposit Date	Feb 4, 2022
Publicly Available Date	Mar 3, 2023
Journal	British Journal of Management
Print ISSN	1045-3172
Electronic ISSN	1467-8551
Publisher	Wiley
Peer Reviewed	Peer Reviewed
Volume	34
Issue	1
Pages	410-441
DOI	https://doi.org/10.1111/1467-8551.12602
Public URL	https://durham-repository.worktribe.com/output/1215006

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© 2022 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management

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