Duong, Huu NhanNguyen, Justin HungNguyen, MyRhee, S. Ghon2018-01-172022-07-112018-01-172022-07-1120172017https://ir.wgtn.ac.nz/handle/123456789/20310We find that economic policy uncertainty is positively related to cash holdings. This positive relation is attributed to financial constraints that emerge as a new and dominating channel through which policy uncertainty affects corporate financing policies. Neither a delay in investment nor a reduction of the disciplining effect from M&A activities explains this positive relation. Increasing cash holdings during the period of high policy uncertainty contributes to firm excess returns and mitigates the negative impact of policy uncertainty on investment.pdfen-NZPolicy uncertaintycash holdingscash-cash flow sensitivityfinancial constraintsinvestmentText