The Influence of Religious Tradition and Social Trust on Corporate Cash Holdings

We examine the impact of religious traditions and social trust on corporate cash holdings from 2007 to 2015 with the listed companies in China as the research sample. The empirical results show that in the areas where the traditional religion and social trust are higher, the cash holding of listed companies is lower, and social trust has the interaction enhancing effect on the impact of religious traditions on corporate cash holdings. Compared with the state-owned listed companies, the traditional religion and social trust have a negative impact on cash holdings in non-state-owned listed companies. Further research shows that the influence of traditional religion and social trust on the cash holdings of enterprises is mainly manifested as an over-curbing effect on the holding of cash. Traditional religion and social trust both as informal institutional factors, have complementary effect on formal institutional factors, such as the marketization process, the level of government governance and the level of legalization. A series of robustness tests prove the reliability of the above conclusion. This article provides empirical evidence that religious traditions and social trust influence the cash holdings of firms.