Multiple directorships and the value of cash holdings

Chou, Ting Kai; Feng, Hsuan Ling

doi:10.1007/s11156-018-0762-1

Cited by 29 publications

(33 citation statements)

References 49 publications

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“…This difference is due to the increase in newly listed privately controlled firms, especially from 2008 onwards. In addition, the distributional characteristics of the control variables in our model are similar to the US-based data (Faulkender and Wang 2006;Dittmar and Mahrt-Smith 2007;Chou and Feng 2019) and China-based data (Megginson et al 2014;Xu et al 2016).…”

Section: Model Specificationsupporting

confidence: 56%

Government control and the value of cash: evidence from listed firms in China

Wang

2020

Rev Quant Finan Acc

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In this paper, we investigate the impact of government control on investors' valuation of cash held by listed firms in China. We find strong and robust evidence that government control leads to a lower value of cash. Further evidence suggests that this negative impact is associated with significant agency costs of political expropriation rather than low financial constraints of the soft-budget effect. Moreover, our extended analyses reveal that the negative impact of government control on the value of cash depends on regional institutional development. In particular, in regions with high institutional development, government control reduces the value of cash, while in areas that are less developed, this negative impact is attenuated to some extent. Overall, our findings shed new light and add a further dimension to the literature, broadening our understanding of the impact of government intervention on the listed firms under its control.

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Section: Model Specificationsupporting

confidence: 56%

Government control and the value of cash: evidence from listed firms in China

Wang

2020

Rev Quant Finan Acc

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“…Baker et al 2011; Jabbouri 2016). Our results also contribute to the inconclusive evidence within the U.S context, which only examined non-financial industries (e.g., Sharma 2011;Chou and Feng 2019). This study is also the first to investigate the possible differential impacts on payout policies across different bank types by utilising an important board attribute such as busyness and exploiting a unique dividend model of Islamic banking.…”

Section: Introductionmentioning

confidence: 62%

“…Such comparative assessments between the alternative dividend models employed by Islamic versus conventional banks is necessary to extend both prior theoretical studies within the Islamic banking context (e.g., Al-Gurrah Daghi 2009;Essa 2010) and conventional banking studies (e.g. Sharma 2011;Jiraporn et al 2011;Chou and Feng 2019). Moreover, we contribute to the growing stream of Islamic-conventional banking literature (e.g., Abdelsalam et al 2016;Mollah et al 2017;Alandejani et al 2017;Alqahtani et al 2017;Safiullah and Shamsuddin 2019;Duqi et al 2020).…”

Section: Introductionmentioning

confidence: 80%

“…Board busyness is likely to lead to high agency costs, related to free cash flow and optimal choices of financial policies. Such associated conflicts have adverse impacts on dividend payout levels, investors' perceptions and stock market valuations (Sharma 2011;Chou and Feng 2019;Elnahass et al 2020a). However, employing a busy BOD might still bring some reputational benefits to firms such as promoting extended business networking as well as connections, and quick access to market resources (Trinh et al 2020b).…”

Section: Introductionmentioning

confidence: 99%

“…In conventional banking, prior studies provide mixed evidence and they mainly focus on industrial firms (i.e. Sharma 2011; Akhigbe and Whyte 2012; Onali et al 2016;Kutubi et al 2018;Chou and Feng 2019). 1 Alongside this inconsistent finding, there is a clear gap in the literature to study alternative dividends payout models by different bank types (i.e.…”

Section: Introductionmentioning

confidence: 99%

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Board busyness and new insights into alternative bank dividends models

Trinh

Elnahass

Salama

2020

Rev Quant Finan Acc

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This study examines the possible opposing effects of the board function of busyness (i.e. the presence of busy independent non-executive directors serving on multiple boards) on bank dividend payout patterns between two alternative payouts models (i.e. conventional and Islamic). Using an international sample for listed banks during the periods of 2006-2018, we show that the busyness of boards of directors can explain differential dividend payouts behaviour between two banking systems. For conventional banking dividend model, a busy board has a significantly positive impact on the bank's dividend payout level. However, during the financial crisis of 2007/2009, the positive impact of board busyness on dividends payouts is tempered for these banks. In contrast, Islamic banks operating under a more constrained dividend model, report significantly lower levels of payouts and lower likelihood when they have busy directors on board. We find insignificant evidence for the effect of the financial crisis in Islamic banks. These results highlight a potential challenge for the unique agency conflicts arising from the complex payout model of Islamic banks (in terms of profit distribution principles, motives, mechanics and techniques, and flexibility of payouts), which is subject to the demand for greater monitoring and additional rulings when compared to the conventional.

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