Can We Learn From Lessons of the Past? A Closer Examination of the Corporate Policy Response of Asian Firms Around the Asian Financial Crisis
31 Pages Posted: 3 Feb 2020
Date Written: January 10, 2020
Using a sample of firms from 8 East Asian countries, we document the corporate policy (cash holding, investment, financing, and payout) response to the Asian Financial Crisis of 1997-1998. Following the crisis, we find significant evidence of a build-up of cash holdings, a fall in capital spending, decreases in sourcing funds from capital markets, and a reduction in dividend payout offset with an increase in the use of repurchases. Our results suggest that such corporate policies used by Asian firms were designed to improve their financial strength by increasing financial flexibility.
Keywords: The Asian Financial Crisis; Emerging countries; Financing constraints; Cash reserve policy; Investment decisions; Financing decisions; Payout policy
JEL Classification: G01, G30, G31, G32, G35
Suggested Citation: Suggested Citation