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Cash holdings and employee welfare

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  • Ghaly, Mohamed
  • Dang, Viet Anh
  • Stathopoulos, Konstantinos

Abstract

This paper examines the relation between employee welfare practices and corporate cash holdings. We find firms that are strongly committed to employee well-being, measured by ratings on employee relations, to hold more cash. The effect of employee welfare standards on cash holdings is stronger for firms in human-capital-intensive, competitive, and high-labor-mobility industries in which employees are more important to their businesses. These results are consistent with the predictions of the stakeholder theory. Overall, our paper provides novel evidence on the role human capital and employee relations play in a firm's cash management policy.

Suggested Citation

  • Ghaly, Mohamed & Dang, Viet Anh & Stathopoulos, Konstantinos, 2015. "Cash holdings and employee welfare," Journal of Corporate Finance, Elsevier, vol. 33(C), pages 53-70.
    • Handle: RePEc:eee:corfin:v:33:y:2015:i:c:p:53-70
    DOI: 10.1016/j.jcorpfin.2015.04.003
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    More about this item

    Keywords

    Cash holdings; Employee welfare; Implicit claims; Stakeholders; Human capital;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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