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

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

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

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

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

Popis výsledku anglicky

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.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50201 - Economic Theory

Projekt

—

Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2023

Kód důvěrnosti údajů

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

Název periodika

SAGE Open

ISSN

2158-2440

e-ISSN

2158-2440

Svazek periodika

13

Číslo periodika v rámci svazku

4

Stát vydavatele periodika

US - Spojené státy americké

Počet stran výsledku

16

Strana od-do

—

Kód UT WoS článku

001107739000001

EID výsledku v databázi Scopus

2-s2.0-85177675498