Does IFRS-9 affect cash holdings? Evidence from non-financial institutions

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PurposeThis paper aims to test whether the implementation of IFRS-9 financial instrument affects a firm’s cash holdings.Design/methodology/approachConsistent with prior studies, this paper uses difference-in-difference estimation on a sample of 37,328-year observations of non-financial listed firms.FindingsThis study finds robust and consistent evidence of an increase in cash holding following the implementation of IFRS 9. The increase in cash holding can be attributed to the increase in bad debt provisions, which have curtailed trade receivables. The results remain similar under different assumptions and firm characteristics.Originality/valueThis study extends the literature on the consequences of IFRS 9 to working capital in non-financial institutions, a less conspicuous area but relevant in the corporate environment.