Peer effects on corporate cash holdings: evidence from Vietnam

This research examines the peer effects on cash holdings in Vietnam, an emerging market, and finds a reverse peer effect on them - that is, a firm’s level of cash holdings negatively relates to those of its peers. We also note the reverse peer effects are stronger for firms facing less competition and with low intangibility. Because the Vietnam market has noticeable lower competition and investment in innovation than in developed economics like the U.S., our evidence lend supports for competition and innovation investment positively driving cash holdings’ peer effects and reconciles inconsistencies in the literature. Our findings also support heterogeneity across countries in peer mimicking behavior and contributes to the cash holdings literature for the Vietnam market.