Abstract
This study explores the relationship between negative online word-of-mouth (NeWOM) on social media and corporate cash holdings. Utilizing data from Fortune 500 firms spanning the years 2010 to 2017, our analysis reveals a positive association between negative online word-of-mouth and the cash-holding policies of these firms. By analysing the moderating factors, we find that high litigation risk and greater diversification weaken the positive relation between NeWOM and cash holding. Conversely, a higher level of insider shareholding enhances the relation between NeWOM and cash holding. Our findings remain robust across econometric specifications, controlling for endogeneity and alternative measures of proxies. Overall, this study contributes by introducing a previously unexplored determinant of cash holdings and providing valuable insights into the ongoing global discourse on the opportunities and implications of social media for corporations.