Corporate governance and cash holdings: A quantile regression approach

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

“…Kusnadi (2011) also found similar results. However, studies conducted by (Harford et al, 2008;Kuan et al, 2012) found insignificant relationship between BIND and cash holding. Based on these empirical results, we hypothesize as:…”

“…Based on agency theory, prior studies have tried to build the relationship between corporate governance mechanisms and cash holdings both in developing and developed markets, but the results of those studies are mixed and unable to give evidence that weak corporate governance is associated with massive cash holding (Kuan et al, 2012). Similarly, prior literature also links corporate cash holding with firm's political connections and indicates that political connections can be used as a source for firms' value.…”

“…More specifically, the relationship of corporate governance and cash holding is simultaneous (Chen, 2008;Jackowicz et al, 2014;Kuan, Li, & Chu, 2011;Kuan et al, 2012), as many corporate decisions are determined endogenously, either contemporaneously or simultaneously (Chen, 2008). Therefore, modeling these relationships will create problems if no appropriate treatment is made for endogeniety (Kuan et al, 2011).…”

“…Prior studies tried to linked firm's corporate governance with cash holding in international settings (Dittmar et al, 2003;Pinkowitz, Stulz, & Williamson, 2006;Harford, Mansi, & Maxwell, 2008). However, these studies have provided inconclusive evidence for the relationship between corporate governance and cash holding (Kuan, Li, & Liu, 2012). This inconsistency in the results are due to different business challenges and opportunities that a firm may face across different industries and subsequently retains various levels of resources for managing these opportunities and challenges (Chen, 2008).…”

“…Firstly, the study checked the effect of Board characteristics on corporate cash holding in Pakistan. Prior researches conducted in developed and developing markets have mixed evidences (Kuan et al, 2012). It merits a mention that, due to different financial and corporate governance structures in developing and developed markets, it is imperative to investigate the corporate governance mechanisms that might affect financial decisions in developing countries (Shah, 2011;Al-Najjar, 2013;D'Espallier, Huybrechts, & Schoubben, 2013;Masood & Shah, 2014;Sun & Wang, 2016).…”