International diversification and corporate cash holding behavior: what happens during economic downturns?International diversification and corporate cash holding behavior: what happens during economic downturns? Peer-Reviewed Journal Publication Δημοσίευση σε Περιοδικό με Κριτές 2022-03-182020enThis study uses fixed-effect regressions estimated with heteroskedasticity-consistent standard errors to investigate the effect of international diversification on corporate cash holding behavior of French-listed firms during economic downturns. The findings show that internationally diversified firms are less inclined to save cash out of their cash flows than their undiversified counterparts. However, during economic downturns, the relationship shifts and shows that international diversification is positively associated with the propensity of firms to save cash out of their cash flows. The negative relationship between international diversification and the propensity of firms to save cash out of their cash flows suggests that risk-reducing effects coupled with easy access to external finance prevail over the high agency costs and information asymmetry associated with international companies. However, during economic slumps, this relationship becomes positive, highlighting a significant influence of the financial crisis on internationally diversified firms relative to their stand-alone counterparts. Thus, this study should provide useful insights for academics, practitioners as well as financial regulators.http://creativecommons.org/licenses/by/4.0/Journal of Economic Behavior and Organization170362-371 Benkraiem, Ramzi Lakhal, Faten, 1978- Zopounidis Konstantinos Ζοπουνιδης Κωνσταντινος Elsevier International diversification Cash holding behavior Financial environment Economic crisis