The impact of cash holding behavior in the valuation of ESG factors
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Keywords
Cash holdingAbstract
This thesis explores how Environmental, Social, and Governance (ESG) performance influences corporate decisions around cash holdings, focusing on publicly listed firms in the United States and China between 2019 and 2023. While traditional finance theories explain cash retention through precautionary motives, agency concerns, and transaction costs, this study considers whether strong ESG performance—often linked to transparency, stakeholder trust, and long-term resilience—can also shape how much liquidity a company chooses to hold. Using a panel dataset of firm-level financial and ESG data, the analysis applies fixed-effects and random-effects regression models to assess whether ESG scores have a statistically significant impact on the ratio of cash equivalents to total assets. Key financial variables such as leverage, operational efficiency, dividend yield, and book value per share are included as controls. A Hausman test guides model selection, with fixed effects ultimately preferred due to firm-specific variation. The findings reveal clear cross-country differences: U.S. firms tend to report higher ESG scores but hold less cash, while Chinese firms exhibit lower ESG performance alongside more conservative liquidity behavior. These results suggest that ESG can act either as a substitute for traditional motives—by lowering perceived risk—or as a complement, by enabling long-term planning that requires financial flexibility. By bridging the gap between financial policy and sustainability metrics, this study contributes to a growing body of research that sees ESG not as an external add-on, but as a meaningful factor in internal corporate decision-making. It offers practical insights for companies, investors, and policymakers seeking to understand how sustainability priorities are reshaping financial strategies across different institutional and market contexts.
Postgraduate Studies Programme
Χρηματοοικονομική και Τραπεζική με ειδίκευση στη Χρηματοοικονομική και Τραπεζική ΔιοικητικήDepartment
Σχολή Χρηματοοικονομικής και Στατιστικής. Τμήμα Χρηματοοικονομικής και Τραπεζικής ΔιοικητικήςNumber of pages
55Language
English
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Αναφορά Δημιουργού-Μη Εμπορική Χρήση-Όχι Παράγωγα Έργα 3.0 Ελλάδα
Αναφορά Δημιουργού-Μη Εμπορική Χρήση-Όχι Παράγωγα Έργα 3.0 Ελλάδα