How female directors help firms to attain optimal cash holdings

Kalak, Izidin El; Tosun, Onur Kemel; Phone, Robert Hudson

doi:10.1016/j.irfa.2022.102034

Cited by 17 publications

(9 citation statements)

References 79 publications

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“…On the one hand, scholars conducted research on the infuencing factors of corporate cash holdings with the goal of optimal cash holdings. Some scholars studied how companies adjust their cash holdings through media reports [7] and whether female representation on the board of directors helps companies to obtain the best cash holdings [8].…”

Section: Innovative Investment and The Value Of Cash Holdingsmentioning

confidence: 99%

The Differential Moderating Effect of Executive Compensation on Innovation Investment and Cash Holding Value in China

Zhang

Shao

Wang

2023

Discrete Dynamics in Nature and Society

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In the context of technological innovation promoting the long-term sustainable development of enterprises, how to better motivate senior executives to create greater value for an enterprise is being widely discussed. In particular, the COVID-19 outbreak has raised concerns about whether companies can deliver more value by holding large amounts of cash. However, although scholars have conducted a lot of research on topics such as innovation and firm value, how differentiated executive compensation incentives regulate the relationship between firm innovation and the value of cash holdings has hardly been explored. This paper selects the balanced panel data of 1470 A-share listed companies from 2012 to 2020 in China to explore the relationship between innovation investment, executive compensation, and the value of cash holdings. It is found that innovation investment has a positive impact on the value of the cash holdings. Based on Herzberg’s hygiene motivational factors, different types of executive compensation may have a hygiene effect or a motivational effect, which is different. As a result, the moderating effect of executive compensation on innovation investment and the value of cash holdings are significantly different. Executive equity compensation and in-service consumption are motivational attributes. They have a positive moderating effect on innovation investment and the value of cash holdings. The moderating effect of executive monetary compensation on innovation investment and the value of cash holdings changes with the change in monetary compensation. When monetary compensation is lower than the threshold value, monetary compensation is reflected as a hygiene attribute, so it has no significant positive moderating effect on innovation investment and the value of cash holdings. When monetary compensation is higher than the threshold value, monetary compensation is reflected as a motivational attribute, so it has a significant positive moderating effect on innovation investment and the value of cash holdings. Meanwhile, it is tested that monetary compensation is not manipulated by executive compensation defense behavior when it is reflected as motivational attributes.

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Section: Innovative Investment and The Value Of Cash Holdingsmentioning

confidence: 99%

The Differential Moderating Effect of Executive Compensation on Innovation Investment and Cash Holding Value in China

Zhang

Shao

Wang

2023

Discrete Dynamics in Nature and Society

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“…Some previous studies have empirically examined the association between female directors and cash holdings. Hence, Atif et al (2019) find a negative relationship between the two variables, whereas Cambrea et al (2019) limit this effect to female independent directors and female chairs, and Tosun et al (2022) find an insignificant association. Although Sah et al (2022) do not focus on female directors but on chief executive officers (CEOs), they find that female CEOs maintain higher levels of cash than male CEOs.…”

Section: Resultsmentioning

confidence: 99%

Board gender diversity and firm solvency: Evidence from Scandinavia

García-Blandón

Argilés‐Bosch

Ravenda

2023

European Management Review

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The implementation of a board gender quota in Norway in 2006 resulted in an extraordinary increase in the number of female directors over a short period of time. As a result, previous studies have used this unique scenario to examine the effects of appointing female directors on various corporate outcomes, such as the cost of debt. Extending this line of research, this study explores whether the appointment of female directors to the boardroom has a significant impact on a firm's solvency. The empirical analysis draws on a sample of firms from Denmark, Finland, Norway and Sweden and implements difference‐in‐differences estimations. The extant evidence is scarce and inconclusive and, more importantly, has been obtained without controlling for endogeneity. Our findings strongly suggest that the solvency of Norwegian firms did not change significantly after the appointment of a large number of female directors. This result is robust to a battery of sensitivity checks.

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“…For instance, one strand of literature has focused on the role of women's representation in firms' investment and financing decisions (e.g., Adams & Ferreira, 2009;Banerjee et al, 2018;Chen et al, 2019;Tosun et al, 2022). These researchers note that female board representation decreases CEOs' certainty about financing decisions, which can lead firms to increase their cash levels.…”

Section: Female Directors and Cash Hoardingmentioning

confidence: 99%

Board Composition and Cash Hoarding: Evidence from Jordanian Small- and Medium-Sized Enterprises

Hassan,

Iskandrani,

Yaseen

et al. 2024

Acad. J. Interdiscip. Stud.

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This study examines the influence of board composition on cash hoarding in Jordan. Based on a sample of 24 small and medium-sized enterprises (SMEs) between 2010 and 2020, the results show that board size has a positive impact on cash hoarding, whereas board independence has a significant negative influence on cash hoarding. Importantly, we note that cash hoarding is not affected by either chief executive officer (CEO) duality or female directors, contradicting the idea that women are risk-averse when making financing decisions. Regarding the other explanatory variables, the results reveal that firm size and operational risk have a significant and negative effect on cash hoarding, whereas growth opportunities have a positive and significant impact on cash hoarding. Finally, cash hoarding is not affected by cash flows. The results remain robust after addressing the endogeneity problem, and they enrich the literature with new evidence of the influence of female directors on cash hoarding in Jordan, where female board representation is low. Furthermore, the results provide evidence of the role of CEO duality on boards of directors, an issue that regulatory bodies in Jordan should consider when planning future governance reforms. Subjects: Quantitative finance, corporate finance, business, management, and accounting. Received: 9 July 2023 / Accepted: 18 November 2023 / Published: 5 January 2024

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How female directors help firms to attain optimal cash holdings

Cited by 17 publications

References 79 publications

The Differential Moderating Effect of Executive Compensation on Innovation Investment and Cash Holding Value in China

The Differential Moderating Effect of Executive Compensation on Innovation Investment and Cash Holding Value in China

Board gender diversity and firm solvency: Evidence from Scandinavia

Board Composition and Cash Hoarding: Evidence from Jordanian Small- and Medium-Sized Enterprises

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