Cash Holdings and Firm-Level Exposure to Epidemic Diseases: COVID-19, SARS, H1N1, Ebola, Zika

We study the effects of firm-level exposure to an epidemic disease on corporate cash holdings amongst U.S firms. Using a text-based measure of firm-level exposure to epidemic diseases and difference-in-difference estimation strategy, we document a positive relationship between the onset of an epidemic disease and corporate cash holdings. We find that, amongst all the recent epidemics, COVID-19 has the strongest impact on cash holdings and that this effect is mostly driven by negative sentiments around the COVID-19 pandemic.