Corporate Governance and Cash Holdings: Empirical Evidence from an Emerging Country, Sri Lanka

Ajanthan, A.; Kumara, K.

doi:10.5296/ijafr.v7i2.12137

Cited by 15 publications

(21 citation statements)

References 29 publications

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“…Empirical studies also provide mixed results. [7] reported a positive effect of cash holdings on firm performance, consistent with pecking order theory. Previous empirical studies [10,11,12] also provide evidence suggesting that cash holdings positively affect financial performance of firms in developed countries as well as in emerging markets.…”

Section: The Effect Of Cash Holdings On Firm Performancesupporting

confidence: 74%

“…In frictionless economy, the amount of cash holding is irrelevant, but in the real world, cost of external fund is higher than that of internal funds due to the market frictions such as transaction costs, information asymmetry, and agency cost and various other financial restrictions [6]. Therefore, the external fund is not the best substitute for internal fund [7]. Firms must determine the optimum level of cash holdings.…”

Section: Introductionmentioning

confidence: 99%

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Cash Holding Management and Firm Performance: Empirical Evidence for Financially Constrained Firms in Indonesia

Wibawa¹,

Nareswari²

2020

Proceedings of the 3rd Asia Pacific International Conference of Management and Business Science (AICMBS 2019)

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A firm must determine the level of cash holding to improve the efficiency of the firm. This study aims to examine the impact of cash holdings on firm performance in Indonesia. Data were obtained from OSIRIS database with the observation period 2010-2016. The results showed there is an u-shaped inverted impact of cash holdings on firm performance which is indicated the optimum level of cash holding. In addition, the optimum level of cash holding was lower for the financially constrained firms.

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Section: The Effect Of Cash Holdings On Firm Performancesupporting

confidence: 74%

Section: Introductionmentioning

confidence: 99%

Cash Holding Management and Firm Performance: Empirical Evidence for Financially Constrained Firms in Indonesia

Wibawa¹,

Nareswari²

2020

Proceedings of the 3rd Asia Pacific International Conference of Management and Business Science (AICMBS 2019)

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“…To simplify the measurement of variables, we arrange the following scale and estimate from Table 2. This study's analysis model is the development of several previous studies that discuss the linkages of systematic risk, corporate governance, and cash holding that are listed by manufacturing companies (Ozordi et al, 2019;Tong, 2008;Ajanthan & Kumara, 2017;.…”

Section: Sample Count 41mentioning

confidence: 99%

Evaluation of systematic risk, corporate governance, and cash holdings: evidence from Indonesia

Azis

Hadjaat

Rositawati

et al. 2021

Economics of Development

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Profits that are calculated to finance unexpected cash need expedite management. This paper investigates the effect of corporate governance on cash holdings with systematic risk as a moderating variable. The population consists of companies from the property and real estate sectors listed on the Indonesia Stock Exchange (IDX) during 2012–2020. Through the purposive sampling technique, the sample obtained 41 companies as the study object. Data analysis is focused on panel data and its interpretation through the Moderated Regression Analysis (MRA). Hypothesis testing uses statistical terms at the 5% probability level. Important findings underline that corporate governance has a positive significant effect on cash holdings, while systematic risk has a negative insignificant effect. On the other hand, the moderation between corporate governance and cash holdings through systematic risk is positive significant. Systematic risk reflects the reliability of a stock; when the risk is higher, it tends to increase in cash flow situations, and investors prefer high-risk investments with the expectation of profit from returns. It is hoped that future contributions will serve as reference material for academics, government, and companies engaged in the financial service sector.

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“…First, gender (male vs female executives) is considered to be a pivotal factor, apart from the role of firm-specific characteristics (i.e. financial performance) and governance, in explaining corporate cash holdings (Ajanthan and Kumara, 2017). Recognizing that previous empirical research in this arena has produced mixed results, it is possible to contend for positive and negative links between gender (i.e.…”

Section: Introductionmentioning

confidence: 99%

Do female executives and CEO tenure matter for corporate cash holdings? Insight from a Southeast Asian country

Suherman

Usman

Mahfirah

et al. 2021

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Purpose This paper aims to investigate the relationship between female executives, chief executive officer (CEO) tenure and corporate cash holdings in the context of the developing Southeast Asian capital market (Indonesia). Design/methodology/approach The sample was screened from 231 publicly listed companies in the Indonesian Stock Exchange. The period of observation was 2011–2017. Two measures were applied for corporate cash holdings: the ratio of cash and cash equivalent to total assets and cash and cash equivalent to net assets. Three surrogate indicators were used for female executives: female CEO, the proportion of female members in the board of management and the number of female members in the board of management. CEO tenure is the length of time a CEO has been a member of the board of management. This study uses panel data regression analysis, including the fixed effect model with clustered standard errors. Findings The empirical evidence indicates that female executives and CEO tenure are positively and negatively associated with corporate cash holdings, respectively, and both are significantly related. Additional analysis using lagged independent variables remains consistent with the main analysis, suggesting that corporate cash holding becomes higher as a female presence in the board of management increases. Research limitations/implications Empirical tests set in Indonesia suggest that female executives are more conservative and risk-averse, thereby holding more cash with a precautionary motive. The findings also imply that CEOs with long tenure focus on long-term performance such as increasing research and development investments or capital expenditure, thus holding less cash. Accordingly, policymakers and regulators should promote diversity issues proportionally and advance to the board level. Originality/value This study contributes to the field of executive and CEO studies by enriching the empirical findings in related topics. In addition, to the best of the authors’ knowledge, this is one of the first studies applying two measures of cash holdings in the setting of a developing Southeast Asian capital market (Indonesia).

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Corporate Governance and Cash Holdings: Empirical Evidence from an Emerging Country, Sri Lanka

Cited by 15 publications

References 29 publications

Cash Holding Management and Firm Performance: Empirical Evidence for Financially Constrained Firms in Indonesia

Cash Holding Management and Firm Performance: Empirical Evidence for Financially Constrained Firms in Indonesia

Evaluation of systematic risk, corporate governance, and cash holdings: evidence from Indonesia

Do female executives and CEO tenure matter for corporate cash holdings? Insight from a Southeast Asian country

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