The effect of exploratory trademark strategy on corporate cash holdings

Abstract

The theoretical and empirical focus of this study is the relationship between exploratory trademark strategy and corporate cash holdings, which is rarely explored in the literature. Using data from Chinese listed firms over the 2005–2021 period, we find a positive correlation between firms' exploratory trademark strategies and their cash holdings. Our cross-sectional analyses reveal that this effect is particularly strong in firms facing greater environmental uncertainty, higher financial constraints, and weaker corporate governance. We also find that exploratory trademark strategies drive increased investment in brand capital and R&D, with firms prioritizing strategic investments over cash dividends. These findings highlight the dual role of trademarks as both market assets and key elements of financial management, which prompt firms to maintain higher cash reserves to support their long-term strategic objectives.