Foreign competition and corporate cash holdings

Purpose This study investigates how foreign competition influences corporate cash holdings, an area that has received limited attention in the finance and management literature. It further explores how chief executive officer (CEO) characteristics and financial crises moderate this relationship. Design/methodology/approach Using a panel dataset of 2,451 US firms from 2000 to 2020, we employ multivariate regression analyses to examine the relationship between foreign competition and corporate cash holdings. We also test for moderation effects using interaction terms and address potential endogeneity concerns with alternative specifications and robustness checks. Findings The results indicate that foreign competition has a positive and statistically significant effect on corporate cash holdings. This effect is more pronounced during periods of financial crisis, suggesting that firms facing foreign competition increase their cash buffers in times of economic uncertainty. Additionally, CEO characteristics significantly moderate the foreign competition–cash holding relationship. Originality/value This study extends the literature on corporate liquidity management by introducing foreign competition as a key determinant of cash holdings. It also contributes to the upper echelons perspective by highlighting how CEO attributes shape firm responses to external competitive pressures.