This paper deals with the issue of exogenous determinants of corporate cash holdings and more specifically the corruption variable. Thus, the study covered a sample of twelve emerging countries in Africa and the Middle East over a period from 2014 to 2019. Using a static regression model on our panel data, the results confirmed the impact of bribery on the cash holdings of African companies, but were not significant in the case of Middle Eastern countries.
In order to confirm the robustness of our main model, we extended our estimates using a dynamic model. The results of the alternative model confirmed our initial results on the impact of corruption on the cash holdings of African companies. Consequently, these results show that the spread of corruption in Africa is an important factor in holding liquid assets, with companies amassing more liquidity to cope with this phenomenon.
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