How Do Soes React to the Covid-19 Variant Shock? Evidence from China's Government Epidemic Response and Firm Cash Holdings

This study examines how the Delta variant wave of COVID-19 affects the cash holdings of state-owned enterprises (SOEs) in the context of China. Using a difference-in-difference method, we show that SOEs might increase their cash holdings after the Delta variant wave; rigorous government epidemic control measures could accelerate this increasing behavior; and economic support measures have little influence. The empirical results are robust to a series of tests, including an alternative proxy for cash holdings, propensity score matching difference-in-difference (PSM-DID) estimation, and placebo tests