Abstract: Based on the quarterly data of A-share listed firms between 2019 and 2020, we find that firms with lower leverage and higher cash holdings before perform better under the COVID-19 pandemic, suggesting that strong liquidity helps firms resist risks. In particular, cash holding affects firm performance through the channel of production. Secondly, we calculate firms' position in the global value chain based on a world input-output table and find that downstream firms perform better under the pandemic. Thirdly, to cope with future uncertainty, cash-holding willingness of firms increases significantly after the pandemic. All findings imply that firms need to improve their financial health to be more resilient toward negative shocks and policy makers need to improve the financial environment to satisfy firms' external financing need.

Key words: COVID-19, cash holding, global value chain