Geographic Diversification of Firm Resources and Cash Holdings

This study examines the intersection of multinational enterprise (MNE) strategy and international financial management, focusing on how the geographic diversification of tangible assets, intangible assets, and growth opportunities is associated with MNEs’ cash holdings, an important component of their financial strategy. Panel regression models were estimated using data from 576 MNEs headquartered in 28 countries. The findings suggest that the geographic diversification of intangible assets and growth opportunities attenuates the positive associations of these assets with cash holdings. In contrast, the geographic diversification of tangible assets attenuates the negative association between tangible assets and cash holdings. Overall, the findings suggest that MNEs’ cash holdings cannot be fully understood by examining only firm-level determinants, such as growth opportunities and multinationality, but also by considering the geographic diversification of different types of assets.