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<p>We find that firms whose headquarters are in states with vulnerable economies are associated with more cash holdings. Further analysis reveals that, in addition to risk per se, the local environment affects firms through the risk perception channel by increasing the observability of risk. Consistent with this channel, we show that local economic vulnerability affects firms irrespective of whether their operations and financing are dependent on headquarters states. The results are robust after controlling for firms’ real estate holdings, industry heterogeneity, and firm-level riskiness.</p>

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Does headquarters location matter for corporate cash holding?

  • 期刊论文

  • 发表日期：

    2026年3月3日

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  • Yolanda Yulong Wang,
  • Long Yi

摘要

We find that firms whose headquarters are in states with vulnerable economies are associated with more cash holdings. Further analysis reveals that, in addition to risk per se, the local environment affects firms through the risk perception channel by increasing the observability of risk. Consistent with this channel, we show that local economic vulnerability affects firms irrespective of whether their operations and financing are dependent on headquarters states. The results are robust after controlling for firms’ real estate holdings, industry heterogeneity, and firm-level riskiness.