scholarly journals Examining The Excess Cash Holdings As An Indicator of Agency Problems

2020 ◽  
Vol 4 (2) ◽  
Author(s):  
Ernie Hendrawaty
Keyword(s):  
Firm Value ◽  
Cash Holdings ◽  
Empirical Finding ◽  
Agency Problems ◽  
Total Sample ◽  
Public Companies ◽  
Concentrated Ownership ◽  
Negative Effect ◽  
Regression Techniques ◽  
Excess Cash

This research aims to examine the implications of excess cash holdings on firm value based on agency theory. Data were obtained from a total sample of 1828 non-financial public companies in Indonesia, with 672 exceeding normal cash holdings using the panel regression techniques. The result showed that excess cash holdings have a negative effect on the firm value which is stronger for more concentrated ownership, for more dispersed ownership and for more financially difficult firms. Overall the empirical finding showed that excess cash holdings acts as a significant indicator of agency problems.

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.

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

2009 ◽  
Vol 84 (1) ◽  
pp. 183-207 ◽  
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.

scholarly journals Pengaruh Manjemen Laba dan Tax Avoidance Terhadap Nilai Perusahaan (Studi Empiris pada Perusahaan Perbankan yang Terdaftar di Bursa Efek Indonesia Tahun 2014-2018)

2020 ◽  
Vol 8 (1) ◽  
pp. 1
Author(s):  
Chindy Annisa Violeta ◽  
Vanica Serly
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Sampling Method ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Total Sample ◽  
Multiple Regression Model ◽  
Future Research ◽  
Negative Effect ◽  
Collection Methods

The puspose of this study is to determine the effect of earnings management and tax avoidance on firm value. This type of research is quantitative. The study was conducted on banking companies listed on the Indonesia Stock Exchange in 2014-2018, with a total sample of 135 samples using a purposive sampling method. Data collection methods are documentary studies. The analysis was done by using multiple regression model. Earnings management is measured using discretionary accruals that are calculated using the performance matched model and tax avoidance is measured using an effective tax ratio (ETR). The results of this study indicate that (1) earnings management has a positive but not significant effect on firm value. (2) Tax avoidance has a significant negative effect on firm value. Recommendations for futher research are expected to expand the object of research becouse in this study only examines banking companies. In addition, future research can use other models as a measurement of earnings management and look for other independent variables if you want to do the same research.Keywords:  Earnings Management; Tax Avoidance; Firm Value.

scholarly journals ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI KEBIJAKAN HUTANG DAN PENGARUHNYA TERHADAP NILAI PERUSAHAAN

2013 ◽  
Vol 3 (2) ◽  
pp. 117
Author(s):  
Ade Irawan ◽  
Hendro Setyono
Keyword(s):  
Firm Value ◽  
Sampling Method ◽  
Stock Exchange ◽  
Total Sample ◽  
Business Risk ◽  
Significance Level ◽  
Analysis Technique ◽  
Risk Variable ◽  
Negative Effect ◽  
Debt Policy

The purpose of this study was to analyze the effect of the variable firm size (Size), business risk (risk), and liquidity (CR) of the debt policy (DTA) and the effect of the debt policy on firm value (PBV) in the companies listed on the Indonesia Stock Exchange (BEI) the period of 2007-2011. This study uses purposive sampling method to take samples. The data obtained based on the publication of Indonesian Stock Exchange (IDX), obtained a total sample of 32 companies. The analysis technique used is multiple regression analysis stages. Hypothesis testing using the t test. Similarly, the business risk variable positive and significant effect on the debt policy because it has a significance value smaller than 5% level. While the liquidity variable and significant negative effect on the debt policy because it has significant value which is lower than the 5% significance level. And the debt policy itself has a positive and significant impact on firm value.

Finance, corporate value and credit market freedom in overinvesting US firms

2020 ◽  
Vol 20 (6) ◽  
pp. 1053-1072
Author(s):  
Alfonsina Iona ◽  
Marco Alberto De Benedetto ◽  
Dawit Zerihun Assefa ◽  
Michele Limosani
Keyword(s):  
Corporate Finance ◽  
Firm Value ◽  
Cash Holdings ◽  
Agency Problems ◽  
Credit Market ◽  
The State ◽  
Corporate Value ◽  
Content Type ◽  
External Finance ◽  
The Relationship

Purpose Using a sample of US firms more likely to be affected by agency problems, the purpose of this paper is to investigate the relationship between corporate value and financial policies and to study whether credit market freedom (CMF) affects this relationship. Design/methodology/approach The authors identify a sub-sample of non-financial US firms potentially affected by agency problems using a joint criterion of over-investment and high cash-holdings. A generalized method of moment econometric framework is then used to estimate the impact of cash-holdings and leverage policies on firm value for this sub-sample. This exercise is also performed by taking into account the level of CMF of the state where the firm operates. Findings The results show that the relationship between cash-holdings – or leverage – and firm value is “U-shaped.” In addition, when the authors focus on the role played by the level of CMF, the authors find a number of interesting facts: CMF facilitates the firms’ access to external finance, thereby relaxing the need of internal funds for investing; the relationship between cash-holdings and firm value is “U-shaped” only in states enjoying high levels of CMF; the probability of observing firms more likely to be affected by agency problems is higher in states with high levels of CMF. Research limitations/implications The empirical findings provide important insights to policymakers, shareholders and practitioners. To policymakers, the results suggest that providing institutional environments with greater CMF can enhance the firm access to external finance, the level of corporate investment and the economic growth. To shareholders, the findings highlight that the conflicts of interest between managers and shareholders may be more severe in states with higher CMF; therefore, adequate financing policies and corporate governance mechanisms must be used to mitigate these conflicts and maximize the firm value. Finally, to practitioners, the evidence suggests that, in valuing a firm, they must take into consideration whether the economic environment provides managers with more freedom to stockpile cash and invest sub-optimally. Originality/value The paper contributes to the corporate finance and governance literature in two respects. First, it provides new evidence on the shape of the relationship between cash holdings and firm value for firms affected by empire-building managers. Second, at the best of the knowledge, it is the first corporate finance study, which analyzes the role played by the CMF at the state level on the capital structure and the level of investment of the firms.

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.

scholarly journals Determinants And Impact Of CSR Assurance: Empirical Study In Public Companies In 2016

2019 ◽  
Vol 23 (1) ◽  
pp. 1
Author(s):  
Calvina, Melinda Haryanto
Keyword(s):  
Regression Model ◽  
Firm Value ◽  
Multiple Linear Regression Model ◽  
Significant Positive Effect ◽  
Analysis Model ◽  
Public Companies ◽  
Industry Type ◽  
Negative Effect ◽  
Positive Effect ◽  
Operational Coverage

This study aims to examine the influence of industry type, leverage, operational coverage on CSR Assurance and CSR Assurance impact on firm value. The population of this research is a public company contained in the list of Forbes Global 2000 in 2016. Samples taken in this study as many as 200 samples by using purposive sampling method. The analysis model used in this research is logistic regression model and multiple linear regression model. The results showed that industry type and operational coverage proved to have a significant positive effect on CSR Assurance. However, leverage is not proven to have a significant negative effect on CSR Assurance, but research results show that leverage has a significant positive effect on CSR Assurance. In addition, CSR Assurance proved to have a significant positive effect on company value.

scholarly journals Peran Kebijakan Dividen Dalam Memediasi Profitabilitas dan Kebijakan Pendanaan Terhadap Nilai Perusahaan

2021 ◽  
Vol 10 (2) ◽  
pp. 161-172
Author(s):  
Desire Nur Addin Afeeanti ◽  
Indah Yuliana
Keyword(s):  
Firm Value ◽  
Structural Equation ◽  
Dividend Policy ◽  
Partial Least Square ◽  
Least Square ◽  
Equation Modeling ◽  
Public Companies ◽  
Independent Variables ◽  
Negative Effect

This study examines the role of dividend policy in mediating profitability and leverage on firm value. The method used in this research is Structural Equation Modeling-Partial Least Square (SEM-PLS) to test the relationship between variables. This study uses data on annual report of go-public companies in 2014-2018 period. ROE and ROA are independent variables (X1), DER and DAR are independent variables (X2). While PER and PBV are the dependent variables and DPR and DY are intervening variables. This study resulted in profitability and leverage has positive and significant effect, but the dividend policy negative and no significant effect on firm value. Profitability has positive and significant effect, but leverage has a significant negative effect on dividend policy. Dividend policy has not been able to mediate between profitability and leverage on firm value.

scholarly journals PENGARUH PROFITABILITAS, LIKUIDITAS, KEPEMILIKAN INSTITUSIONAL DAN KEPEMILIKAN MANAJERIAL TERHADAP NILAI PERUSAHAAN

2019 ◽  
Vol 8 (10) ◽  
pp. 6099
Author(s):  
Linda Safitri Dewi ◽  
Nyoman Abundanti
Keyword(s):  
Firm Value ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Institutional Ownership ◽  
Multiple Linear Regression Analysis ◽  
Managerial Ownership ◽  
Public Companies ◽  
Technical Data ◽  
Real Estate Sector ◽  
Negative Effect

The main purpose of companies that have gone public (companies whose shares are listed on the Indonesia Stock Exchange) is to generate profits to increase the value of the company. This study aims to determine the effect of profitability, liquidity, institutional ownership, and managerial ownership on firm value. This research was conducted on the property and real estate sector which was listed on the Indonesia Stock Exchange for the period 2014-2017, with a sample of 11 companies. Data collection is done by purposive sampling method. Technical data analysis in this study uses multiple linear regression analysis. Based on the analysis obtained results that profitability and managerial ownership have a positive and significant effect on firm value, while liquidity and institutional ownership have a negative effect on firm value. Keywords: firm value; profitability; liquidity; institutional ownership; managerial ownership  

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