Firm-level political risk, liquidity management, and managerial attributes

This study examines how firm-level political risk (FLPR) relates to excess cash holding and cash value. Mana-gerial ability and psychological confidence are examined as moderators of these relationships. FLPR is measured by a computational linguistic analysis of firm conference call manuscripts. The findings indicate that FLPR has a positive (negative) relationship to excess cash (cash value) and that the managerial ability and CEO over-confidence of managers have a negative (positive) moderating effect on excess cash holdings (cash value). Robustness tests show consistent results using national-level policy uncertainty and alternative empirical models.