We examine how shareholder valuation on corporate cash holdings in Korea are affected by the unexpected exogenous shocks caused by the COVID-19 pandemic. We find that shareholders valued an extra dollar of cash significantly higher at the second quarter of 2020. This effect is mitigated by the cash holdings at hand by about a third for the mean firm, which is consistent with precautionary motives to hold cash. In the cross-section, the marginal value of cash increased significantly for financially constrained firms, including firms that suffered from earnings shocks. As the marginal value of cash increased, firms increased their cash holdings accordingly. Our finding might be well understood in association with monetary and fiscal policy, such as Quantitative Easing (QE). 

Key words: Marginal value of cash, COVID-19, Cash holdings, Financial constraints, Precautionary motives of cash
JEL Classification: G30, G32, G38​