Abstract
This paper is the first to study the determinants of cash holdings of multinational firms in China from 2000 to 2013. Using different cutoffs of foreign sales ratio, we show that Chinese multinational firms do not hold significantly more cash relative to non-multinationals, except for the cutoff of 50% foreign sales ratio. This insignificance is dominant in non-SOE subsample. We also find that Chinese MNCs invest more but are less profitable, especially in non-SOE subsample. Overall, we conclude that the need of liquidity of multinational corporations in China is different from those in America.
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