Abstract
ABSTRACT In this study, we examine the relation between corruption and corporate cash holding policy using data from 35,288 firms in 44 countries. The results indicate a non-linear relation between corruption and corporate cash holdings with a negative coefficient of the cubic term of corruption. Specifically, in developed (frontier) countries with low (high) level of corruption, we find a negative relation, whereas in emerging countries with moderate level of economic development and corruption, we find a positive relation. Thus, we suggest that corruption is an important variable that affects corporate cash holding policy by the level of economic development.
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