We document a negative impact of economic policy uncertainty on stock liquidity. This impact is stronger for firms with: (i) higher sensitivity of stock returns to economic policy uncertainty; (ii) higher level of political risk; and (iii) heavier dependence on government spending. We identify...

We find that U.S. corporations increase their cash holdings in response to higher economic policy uncertainty. The increase in cash holdings is not attributed to a reduction in firm investments. This increase is more pronounced for financially constrained firms or those with larger exposure to...

We find a strong evidence that firms reduce cash effective tax rate when economic policy uncertainty heightens. Firms also engage in more aggressive forms of tax avoidance including long-term tax planning or shelters. Cash holdings attenuate the negative effect of policy uncertainty on cash...