scholarly journals Board Characteristics, Political Connections, and Corporate Cash Holdings: The Role of Firm Size and Political Regime

2017 ◽  
Vol 9 (1) ◽  
pp. 157-179 ◽  
Author(s):  
Sabeeh Ullah ◽  
Yasir Kamal
Keyword(s):  
Firm Size ◽  
Cash Holdings ◽  
Political Connections ◽  
Political Regime ◽  
Board Characteristics ◽  
Corporate Cash Holdings

The impact of institutional factors on corporate mechanism of cash adjustment – New evidence from emerging Asia

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Santanu Das ◽  
Ashish Kumar ◽  
Asit Bhattacharyya
Keyword(s):  
Financial Development ◽  
Cash Holdings ◽  
Content Type ◽  
Adjustment Mechanism ◽  
Management Policies ◽  
New Evidence ◽  
Corporate Cash Holdings ◽  
Adjustment Dynamics ◽  
Country Specific

PurposeThe purpose of this study is to understand how the business environment of a country has an impact on cash management policies of the firms and also to investigate if there is any asymmetry in cash adjustment dynamics when a firm deviates from its long-term target of cash holdings.Design/methodology/approachUsing a sample of seven emerging Asian countries in the period 2001–2019, the authors investigate the role of country specific variables in the corporate cash holdings and their cash adjustment mechanism. They use the panel data regression method to estimate the results.FindingsThe authors find that the overall financial development of a country has a significant impact on corporate cash holdings and cash adjustment dynamics. When a firm has excess cash, the speed of adjustment towards the target is faster as compared to when it has deficit cash holdings. Further, when a firm holds excess cash, it adjusts towards the target using cash from investments; in case of deficit cash holdings, the adjustment happens via cash from financing activities.Practical implicationsThe results of the study are helpful to corporate managers as these are important references to them to understand and design cash management policies by considering factors that are measured at the country level. It also provides them a clearer understanding about the role of corporate board and information asymmetry in cash holdings.Originality/valueThis is the first study which examines the role of country-specific variables on corporate cash holdings and their adjustment mechanism of firms in emerging Asia. Further, the study extends the literature by providing new evidence that there is asymmetry in cash adjustment dynamics of firms after controlling for the overall financial development of a country.

Corporate cash holdings and political connections

2013 ◽  
Vol 42 (1) ◽  
pp. 123-142 ◽  
Author(s):  
Matthew D. Hill ◽  
Kathleen P. Fuller ◽  
G. Wayne Kelly ◽  
Jim O. Washam
Keyword(s):  
Cash Holdings ◽  
Political Connections ◽  
Corporate Cash Holdings

State Ownership and Corporate Cash Holdings

2018 ◽  
Vol 53 (5) ◽  
pp. 2293-2334 ◽  
Author(s):  
Ruiyuan (Ryan) Chen ◽  
Sadok El Ghoul ◽  
Omrane Guedhami ◽  
Robert Nash
Keyword(s):  
Cash Holdings ◽  
State Ownership ◽  
Country Level ◽  
Value Of Cash ◽  
Privatized Firms ◽  
New Evidence ◽  
Corporate Cash Holdings ◽  
Robust Evidence ◽  
Insight Into

Using a unique sample of newly privatized firms from 59 countries, this article provides new evidence about the agency costs of state ownership and new insight into the corporate governance role of country-level institutions. Consistent with agency theory, we find strong and robust evidence that state ownership is positively related to corporate cash holdings. Moreover, we find that the strength of country-level institutions affects the relation between state ownership and the value of cash holdings. In particular, as state ownership increases, markets discount the value of cash holdings more in countries with weaker institutions.

Net Operating Loss Carryforwards and Corporate Savings Policies

2021 ◽  
Author(s):  
Shane M Heitzman ◽  
Rebecca Lester
Keyword(s):  
Cash Holdings ◽  
Financial Policy ◽  
Tax Rate ◽  
Policy Responses ◽  
Tax Returns ◽  
Corporate Financial Policy ◽  
Tax Loss ◽  
Corporate Cash Holdings ◽  
Loss Firms

We examine the relation between corporate cash holdings and tax net operating loss carryforwards (NOLs). The literature demonstrates that firms should distribute cash to shareholders rather than retain it and generate passive investment income taxed at both corporate and investor levels. However, if the firm's tax rate on passive income is lower than shareholders'-as when the firm has NOLs-theory also shows that the firm should retain cash and invest on the shareholders' behalf. Consistent with this, we find that NOLs are associated with higher levels of savings; firms save an additional $0.12 to $0.17 per dollar of tax-effected NOL benefit. Furthermore, investors place a higher value on corporate cash in tax loss firms, consistent with NOLs increasing the after-tax returns on passive investments. The paper adds to the literature studying corporate financial policy responses to taxation and quantifies the role of NOLs in corporate savings decisions.

Corporate Cash Holdings and Political Connections

2010 ◽  
Author(s):  
Matthew D. Hill ◽  
Kathleen Fuller ◽  
G. W. Kelly ◽  
Jim Washam
Keyword(s):  
Cash Holdings ◽  
Political Connections ◽  
Corporate Cash Holdings

FINANCIAL CONSTRAINTS AND CORPORATE CASH HOLDINGS: AN EMPIRICAL ANALYSIS USING FIRM LEVEL DATA

2017 ◽  
Vol 12 (02) ◽  
pp. 1750009 ◽  
Author(s):  
ABDUL RASHID ◽  
MARYAM ASHFAQ
Keyword(s):  
Cash Flow ◽  
Firm Size ◽  
Financial Constraints ◽  
Cash Holdings ◽  
Firm Level ◽  
Book Value ◽  
Level Data ◽  
Alternative Measures ◽  
Cash Flow Volatility ◽  
Corporate Cash Holdings

This paper empirically investigates whether the sensitivity of cash to its firm-specific determinants differs across financially constrained and unconstrained firms. We sort out firm-year observations as financially constrained and unconstrained based on the median value of three alternative measures: the firm size, dividend payout ratio, and Whited and Wu (WW) index. In order to mitigate the problem of endogeneity and to take into account the dynamic nature of the panel dataset, we apply the robust two-step system-GMM estimator on unbalanced annual panel dataset covering the period 2001–2013. The results suggest that financially constrained firms (FCFs) decrease their cash holdings with size, leverage, and the payout ratio, while they increase their cash amounts with both the market-to-book value and the cash flow volatility. On the other hand, for financially unconstrained firms (FUCFs), we show that there is a positive relationship between cash holdings and firm size, the payout ratio, and the market-to-book value, while both the cash flow volatility and leverage are negatively related to cash holdings. These asymmetries in the sensitivity of cash to its determinants are robust across all the three measures of financial constraints used in the study.

scholarly journals The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable

2019 ◽  
Vol 2 (2) ◽  
pp. 96
Author(s):  
Woen Cliff Wibowo ◽  
Sugeng Wahyudi
Keyword(s):  
Financial Performance ◽  
Firm Size ◽  
Dividend Policy ◽  
Capital Expenditure ◽  
Cash Holdings ◽  
Cash Holding ◽  
Liquid Asset ◽  
Negative Effect ◽  
Positive Effect

This study aims to determine and analyze the effect of financial performance (profitability, leverage, capital expenditure, liquid asset substitute), IOS, and company size on cash holding by using dividend policy as a moderating variable. The number of samples of this study was 108 observations of non-financial companies in the LQ 45 Index for the period  of 2011-2016. The results of moderated regression analysis (MRA) shows that profitability has a positive effect on cash holding, while leverage, liquid asset substitute, IOS, and firm size have negative effect on cash holdings. The results of this study also show that dividend policy can be a moderating variable which weakens the positive effect of profitability on cash holding and strengthens the negative effect of capital expenditure, but the dividend policy is not able to moderate the influence of leverage on cash holding. As a result, the companies were able to make large dividend payouts to reduce the excessive amount of cash holding that managers often abused for their own benefits and increasingly prospering investors with a given dividend.

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