The religion effect on corporate cash holding in China: Buddhism and Taoism

Buddhism and Taoism have been deeply rooted in China for generations both of them a profound impact on the local culture social norms. By employing 23,999 firm-year observations between 2008 2018, we examine how religious norms affect corporate cash policies. We provide strong evidence that religiosity significantly reduces level holdings, by mitigating financial constraints earnings management listed companies. Managers from areas make more effective investments distribute dividends. Furthermore, our findings document religion has pronounced influence holdings amongst firms with smaller size, lower leverage, higher marketization, internal control facing fierce market competition. Overall, Taoism, constituting main China, optimize firms' firm value.