scholarly journals Corporate Governance and the Value of Excess Cash Holdings of Large European Firms

2011 ◽  
pp. no-no ◽  
Author(s):  
Marc B.J. Schauten ◽  
Dick van Dijk ◽  
Jan-Paul van der Waal
Keyword(s):  
Corporate Governance ◽  
Cash Holdings ◽  
Excess Cash

scholarly journals Does executive ownership lead to excess target cash? The case of UK firms

2017 ◽  
Vol 17 (5) ◽  
pp. 876-895 ◽  
Author(s):  
Alfonsina Iona ◽  
Leone Leonida ◽  
Alexia Ventouri
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Cash Holdings ◽  
Logit Analysis ◽  
Governance Mechanism ◽  
Governance System ◽  
Content Type ◽  
Excess Cash ◽  
The Uk ◽  
The Impact

Purpose The aim of this paper is to investigate the dynamics between executive ownership and excess cash policy in the UK. Design/methodology/approach The authors identify firms adopting an excess policy using a joint criterion of high cash and cash higher than the target. Logit analysis is used to estimate the impact of executive ownership and other governance characteristics on the probability of adopting an excess cash policy. Findings The results suggest that, in the UK, the impact of the executive ownership on the probability of adopting an excess cash policy is non-monotonic, in line with the alignment-entrenchment hypothesis. The results are robust to different definitions of excess cash policy, to alternative specifications of the regression model, to different estimation frameworks and to alternative proxies of ownership concentration. Research limitations/implications The authors’ approach provides a new measure of the excess target cash for the firm. They show the need to identify an excess target cash policy not only by using an empirical criterion and a theoretical target level of cash, but also by capturing persistence in deviation from the target cash level. The authors’ measure of excess target cash calls into questions findings from previous studies. The authors’ approach can be used to explore whether excess cash holdings of UK firms and the impact of managerial ownership have changed from before the crisis to after the crisis. Practical implications The authors’ measure of excess target cash allows identifying in practice levels of cash which are abnormal with respect to an equilibrium level. UK firms should be cautious in using executive ownership as a corporate governance mechanism, as this may generate suboptimal cash holdings and suboptimal firm value. Excess cash policy might be driven not only by a poor corporate governance system, but also by the interplay between agency costs of managerial opportunism and cost of the external finance which further research could explore. Originality/value Actually, “how much cash is too much” is a question that has not been addressed by the literature. The authors address this question. Also, this amount of cash allows the authors to study the extent to which executive ownership contributes to explain the out-of-equilibrium persistency in the cash level.

Firm Cash Holdings in Emerging Economics: Does Corporate Governance matter

2021 ◽  
Vol 4 (1) ◽  
pp. 1
Author(s):  
Rabiatu Kamil ◽  
Mark Odediyah ◽  
Kingsley Opoku Appiah
Keyword(s):  
Corporate Governance ◽  
Cash Holdings

scholarly journals Family Control And The Value Of Cash Holdings

2015 ◽  
Vol 31 (2) ◽  
pp. 647 ◽  
Author(s):  
Sabri Boubaker ◽  
Imen Derouiche ◽  
Majdi Hassen
Keyword(s):  
Firm Value ◽  
Family Firms ◽  
Cash Holdings ◽  
Firm Resources ◽  
Family Control ◽  
Large Sample ◽  
Listed Firms ◽  
Excess Cash ◽  
Cash Reserves ◽  
Corporate Cash Holdings

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.

scholarly journals The Effect of Optimal Cash and Deviation from Target Cash on the Firm Value: Empirical Study in Indonesian Firms

2019 ◽  
Vol 10 (1) ◽  
pp. 1-13
Author(s):  
R Heru Kristanto HC ◽  
Mamduh M Hanafi ◽  
Wayan Nuka Lantara
Keyword(s):  
Corporate Governance ◽  
Empirical Study ◽  
Firm Value ◽  
Fixed Effects ◽  
Cash Holdings ◽  
Cash Holding ◽  
Fixed Effects Model ◽  
Publicly Traded ◽  
Dynamic Panel ◽  
Panel Fixed Effects

The aim of this paper is to examine the effect of cash, optimal cash holding, deviation from target cash (the target adjustment model) on the firm value. This research uses a sample of Indonesian publicly traded firms for the period 2001-2017 (3,349 observation). This paper uses a dynamic panel fixed effects model to estimate optimal cash holdings. Hypothesis testing uses GLS fixed effect and interaction effect uses regression moderated analysis. Research finds that: first, cash, optimal cash, and deviation from target cash have an effect on the firm value. Second, corporate governance moderates the effect of cash, optimal cash, and deviation from target cash on the firm value. Third, investment positively moderates the effect of cash on the firm value. Investment negatively moderates the effect of optimal cash, deviation from target cash on the firm value. Debt negatively moderates the effect of cash, optimal cash on the firm value. Debt positively moderates the effect of deviation from target cash on the firm value. 

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