Corporate risk-taking, financial constraints and cash holdings: evidence from Saudi Arabia

Purpose - This study aims to investigate the association between corporate risk-taking and cash holdings, and whether fi nancial constraints moderate this association. Design/methodology/approach - Regression analyses were applied to 606 fi rm-year observations from Saudi Arabia from 2011 to 2020. Findings - Firms with higher risk-taking exhibit higher cash holdings, whereas fi nancially constrained fi rms have lower cash holdings. The positive association between corporate risk-taking and cash holdings is weaker for fi nancially constrained fi rms than for nonconstrained fi rms. Practical implications - For investors, investment decisions that include the cash holding assessment would also consider the fi rm-level uncertainty surrounding the fi rms. Originality/value - This study explores the joint effect of corporate risk-taking and fi nancial constraints on cash holding, and hence considers the strategic adaptations to navigate uncertainty in strategies related to cash holdings in Saudi Arabia.