What matters for corporate cash holdings board governance, financial constraints, or interactions?

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F70883521%3A28120%2F23%3A63566058" target="_blank" >RIV/70883521:28120/23:63566058 - isvavai.cz</a>

Result on the web

<a href="https://journals.sagepub.com/doi/10.1177/21582440231210618" target="_blank" >https://journals.sagepub.com/doi/10.1177/21582440231210618</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1177/21582440231210618" target="_blank" >10.1177/21582440231210618</a>

Result language

angličtina

Original language name

What matters for corporate cash holdings board governance, financial constraints, or interactions?

Original language description

Corporate cash holdings have received increased attention from researchers and practitioners as cash management is a crucial task for executives. Holding too much cash can result in low returns and mismanagement by managers. Conversely, holding low cash reserves can lead to missed investment opportunities. The present study examines the relationship between board governance, financial constraints, and corporate cash holdings. The robust fixed-effects method is used in this study to analyze 860 A-listed firms in China from 2005 to 2020. An index is designed to measure board effectiveness, while financial constraints are measured using Z-score, the Kaplan and Zingales index, and the SA index. The major findings document that the financially less constrained firms hold more cash when there is an effective board governance. Furthermore, financially less constrained firms have more robust board governance to minimize the agency concerns of managers and shareholders. This research provides an inference for stockholders’ activism connected to the cash holdings of the financially constrained and less constrained companies. The findings offer useful policy implications for stakeholders to reform contemporary cash holding policies. Specifically, understanding the role of an effective governance system for financially less constrained firms would help minimize the potential agency conflict.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50201 - Economic Theory

Project

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Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2023

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

SAGE Open

ISSN

2158-2440

e-ISSN

2158-2440

Volume of the periodical

13

Issue of the periodical within the volume

4

Country of publishing house

US - UNITED STATES

Number of pages

16

Pages from-to

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UT code for WoS article

001107739000001

EID of the result in the Scopus database

2-s2.0-85177675498