Cash management, governance, and the global financial crisis: evidence from developing Asia

We investigate how governance and the Global Financial Crisis (GFC) affect cash
management. Assessing 169,916 firm-years in 26 developing Asian countries, our
empirical results show that firms in good (poor) governance countries tend to hold more cash before (after) the GFC. In particular, the outcome effect of governance on cash holdings in the pre-crisis and crisis periods shifts to a substitution effect for governance in the post-crisis period in developing Asia.