Bingbin Dai¹, Mingrui Zhu¹, Yi Suo^1,

Corporate investment is highly sensitive to changes in supply and demand as well as economic cycles. The credit crisis and the uncertainties in the external environment can also affect a company's investment behavior. The cash holdings of an enterprise can help withstand operational risks during sudden crises and play a certain role in maintaining investment. This paper takes A-share listed companies from 2018 to 2021 as samples, and uses the DID (Difference-in-Differences) model to test the buffering effect of the cash holding level of enterprises before the COVID-19 pandemic on their investment behavior during the pandemic, and also conducts a heterogeneity test. The results show that after the pandemic, the investment expenditure of enterprises has dropped significantly, and the high cash holding policy of enterprises before the pandemic can have a certain buffering effect on their investment expenditure. Further research reveals that for enterprises with greater financing constraints, the cash holding level has a stronger buffering effect on the decline in investment expenditure during the pandemic; while for enterprises with a higher degree of operation in overseas markets, the buffering effect of the cash holding level on investment expenditure is weaker.

Cash Holdings, Investment Expenditure, Impact of Sudden Public Incidents, COVID-19 Pandemic