Excess cash holdings and Innovation based on OLS model

The present study investigates the effects of family control on the value of corporate cash holdings. Using a large sample of French listed firms, the results show that the value of excess cash reserves is lower in family firms than in other firms, reflecting investors concern about the potential misuse of cash by controlling families. We also find that the value of excess cash is lower when controlling families are involved in management and when they maintain a grip on control, indicating that investors do not expect the efficient use of cash in these firms. Our findings are consistent with the argument that the extent to which excess cash contributes to firm value is lower when dominant shareholders are likely to expropriate firm resources. Overall, family control seems to be a key determinant of cash valuation when ownership is concentrated.

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Auditor liability and excess cash holdings: Evidence from audit fees of foreign incorporated firms

International Review of Financial Analysis ◽

10.1016/j.irfa.2021.101947 ◽

2021 ◽

pp. 101947

Author(s):

Deborah Drummond Smith ◽

Kimberly C. Gleason ◽

Yezen H. Kannan

Keyword(s):

Cash Holdings ◽

Audit Fees ◽

Auditor Liability ◽

Excess Cash

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The effect of managerial horizon on cash holdings

Managerial Finance ◽

10.1108/mf-09-2018-0442 ◽

2019 ◽

Vol 45 (8) ◽

pp. 1092-1110

Author(s):

Sanjib Guha ◽

Niazur Rahim

Keyword(s):

Design Methodology ◽

Cash Holdings ◽

Previous Literature ◽

Cash Holding ◽

Firm Characteristics ◽

Current Compensation ◽

Content Type ◽

Ceo Age ◽

Excess Cash ◽

Managerial Horizon

Purpose US corporations are now sitting on an enormous stockpile of cash. Instead of investing their resources and creating jobs, the firms are holding on to excess cash. Academicians and practitioners alike have tried to fathom the reasons why companies are holding on to so much cash. Numerous studies have talked about the various motives for holding cash. Many researchers have tried to correlate excess cash holding with particular firm characteristics. The purpose of this paper is to study the correlations that exist between excess cash holding and some measurable managerial characteristics. Design/methodology/approach Four different measures of managerial horizon (MH) were constructed. The first two constructs (MH1 and MH2) are based on the CEO’s age and how long he has been the CEO of the company. The next two constructs (MH3 and MH4) are based on compensation, proportion of current compensation and proportion of future compensation. This paper tries to examine if MH has any impact on excess cash holding. Findings The results clearly show that the CEO age and the proportion of CEO’s compensation (current and future) do determine level of cash holding in the company. Younger CEOs hold more cash compared to older CEOs. Older CEOs hold less cash suggesting that as CEOs grow older they might be motivated by the idea of leaving a long lasting legacy. CEOs who receive more of their compensation in future payments also hold on to more cash, whereas CEOs who receive more of their compensation in current payments hold less cash. Originality/value There is no previous literature dealing with MH and cash holding by corporations.

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Why Do Cities Hoard Cash? Determinants and Implications of Municipal Cash Holdings

The Accounting Review ◽

10.2308/accr.2009.84.1.183 ◽

2009 ◽

Vol 84 (1) ◽

pp. 183-207 ◽

Cited By ~ 41

Author(s):

Angela K. Gore

Keyword(s):

Cash Holdings ◽

Agency Problems ◽

City Manager ◽

State Revenue ◽

Excess Cash ◽

Administrative Expenses ◽

Manager Incentives

ABSTRACT: This study examines the determinants of municipal cash holdings and the implications of holding high levels of cash. The first part of the analysis investigates municipal manager incentives to accumulate cash as part of normal operations. Results indicate that municipalities with a higher variation in revenues, fewer sources of revenues, and higher growth accumulate more cash. Larger governments and those receiving relatively more state revenue accumulate less cash. Further analysis considers whether high levels of cash indicate agency problems, and finds municipalities with high cash holdings spend more on administrative expenses, city manager salaries, and bonuses. I find no evidence that municipalities with excess cash reduce taxes. The presence of staggered councils and councils that are not independent tend to exacerbate excessive cash holdings. These results are consistent with the proposition that municipalities with high cash levels have agency problems relative to those with lower cash holdings.

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