코로나19 위기 이후 기업의 현금보유 증가에 대한 가치관련성과 ESG 활동의 영향

The COVID-19 pandemic has had an enormous impact on the global real economy. This unexpected exogeneous shock to both demand and supply has increased uncertainty in the economy. The theory of precautionary motive for cash implies that corporate cash holdings should gain more value in a highly uncertain environment. As cash is highly discretionary and is readily available it can be defined as a short-term discretionary slack, and as such it is necessary condition for companies to invest in ESG practices. Sustainability information have recently received considerable attention by investors. In this context, we empirically examines whether the levels of corporate cash holdings increased during the COVID-19 crisis. We also investigate whether the value relevance of increasing cash holdings in the post-COVID-19 crisis differently appear depending on firm with high level of ESG activities. We use the KCGS (Korea Corporate Governance Service) data of the firms listed on the KOSPI and KOSDAQ, and our sample period is from 2017 to 2021. First, consistent with the precautionary motive of cash, we find that the levels of corporate cash holdings has increased during the COVID-19 crisis. Second, the dependent variable is the stock return in regression and the test variables are the triple-interaction of cash with ESG ratings and post-COVID-19 effects generally show a positive effect, suggesting that firms with high ESG ratings show that the value relevance of cash holdings increased more in the post-COVID-19 than in the pre-COVID-19. This results show that the movement toward global ESG activities after the outbreak of COVID-19 also affected the value of cash holdings. Therefore, in our core finding we show that the equity market places a higher value on corporate cash holdings with good performance of ESG activities during COVID-19 crisis. Our results are quantitatively similar if we use a sample divided pre- and post- COVID-19 or performing a Clustering test. In addition, these results were mainly found when the social and governance sector was high. As a result, ESG performance can act as a “cushion” for a company and serve as a good hedge in a crisis. This paper contributes by providing timely evidence that emphasizes the importance of ESG activities during the COVID-19 pandemic.