Advanced Search
MyIDEAS: Login to save this article or follow this journal

Cash holdings and corporate governance in family-controlled firms

Contents:

Author Info

  • Kuan, Tsung-Han
  • Li, Chu-Shiu
  • Chu, Shin-Herng
Registered author(s):

    Abstract

    This study examines the association between corporate governance and cash policy within family-controlled firms. Family businesses are complex, because, in addition to dealing with common business requirements and opportunities, they must consider the needs and desires of the family owners. The results of this study show that the impact of corporate governance, with its separation of control rights and cash flow rights, director-ownership-in-pledge ratio and proportion of independent directors on cash policy, differs between family-controlled and nonfamily-controlled firms. Separation of seat control rights and cash flow rights, as well as chair duality, significantly affects the cash policy within different levels of cash holdings in firms.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/B6V7S-50X30X8-1/2/daa2dec241e0f77fb4080501a33d2cd9
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 64 (2011)
    Issue (Month): 7 (July)
    Pages: 757-764

    as in new window
    Handle: RePEc:eee:jbrese:v:64:y:2011:i:7:p:757-764

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Cash holdings Family-controlled firms Corporate governance;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, American Economic Association, vol. 76(2), pages 323-29, May.
    2. Dittmar, Amy & Mahrt-Smith, Jan & Servaes, Henri, 2003. "International Corporate Governance and Corporate Cash Holdings," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 38(01), pages 111-133, March.
    3. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
    4. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, Elsevier, vol. 58(1-2), pages 3-27.
    5. Yan-leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2004. "Tunneling, Propping and Expropriation Evidence from Connected arty Transactions in Hong Kong," Working Papers 092004, Hong Kong Institute for Monetary Research.
    6. Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
    7. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, Elsevier, vol. 13(2), pages 187-221, June.
    8. Tim Opler & Lee Pinkowitz & Rene Stulz & Rohan Williamson, 1997. "The Determinants and Implications of Corporate Cash Holdings," NBER Working Papers 6234, National Bureau of Economic Research, Inc.
    9. Thomas W. Bates & Kathleen M. Kahle & Rene M. Stulz, 2006. "Why Do U.S. Firms Hold So Much More Cash Than They Used To?," NBER Working Papers 12534, National Bureau of Economic Research, Inc.
    10. Brenes, Esteban R. & Madrigal, Kryssia & Requena, Bernardo, 2011. "Corporate governance and family business performance," Journal of Business Research, Elsevier, Elsevier, vol. 64(3), pages 280-285, March.
    11. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages 461-88, June.
    12. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    13. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, American Finance Association, vol. 57(6), pages 2741-2771, December.
    14. Jaskiewicz, Peter & Klein, Sabine, 2007. "The impact of goal alignment on board composition and board size in family businesses," Journal of Business Research, Elsevier, Elsevier, vol. 60(10), pages 1080-1089, October.
    15. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(6), pages 1155-77, December.
    16. Chrisman, James J. & Chua, Jess H. & Kellermanns, Franz W. & Chang, Erick P.C., 2007. "Are family managers agents or stewards? An exploratory study in privately held family firms," Journal of Business Research, Elsevier, Elsevier, vol. 60(10), pages 1030-1038, October.
    17. Anderson, Ronald C. & Mansi, Sattar A. & Reeb, David M., 2003. "Founding family ownership and the agency cost of debt," Journal of Financial Economics, Elsevier, Elsevier, vol. 68(2), pages 263-285, May.
    18. Han, Seungjin & Qiu, Jiaping, 2007. "Corporate precautionary cash holdings," Journal of Corporate Finance, Elsevier, Elsevier, vol. 13(1), pages 43-57, March.
    19. Kim, Chang-Soo & Mauer, David C. & Sherman, Ann E., 1998. "The Determinants of Corporate Liquidity: Theory and Evidence," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 33(03), pages 335-359, September.
    20. Yin-hua Yeh & Tsun-siou Lee & Tracie Woidtke, 2001. "Family Control and Corporate Governance: Evidence from Taiwan," International Review of Finance, International Review of Finance Ltd., International Review of Finance Ltd., vol. 2(1&2), pages 21-48.
    21. Lee Pinkowitz & Rene M. Stulz & Rohan Williamson, 2003. "Do Firms in Countries with Poor Protection of Investor Rights Hold More Cash?," NBER Working Papers 10188, National Bureau of Economic Research, Inc.
    22. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, Elsevier, vol. 58(1-2), pages 81-112.
    23. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    24. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(2), pages 301-25, June.
    25. Desai, Ashay & Kroll, Mark & Wright, Peter, 2005. "Outside board monitoring and the economic outcomes of acquisitions: a test of the substitution hypothesis," Journal of Business Research, Elsevier, Elsevier, vol. 58(7), pages 926-934, July.
    26. Cubbin, John S & Leech, Dennis, 1983. "The Effect of Shareholding Dispersion on the Degree of Control in British Companies: Theory and Measurement," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 93(37), pages 351-69, June.
    27. Harford, Jarrad & Mansi, Sattar A. & Maxwell, William F., 2008. "Corporate governance and firm cash holdings in the US," Journal of Financial Economics, Elsevier, Elsevier, vol. 87(3), pages 535-555, March.
    28. Fan, Joseph P. H. & Wong, T. J., 2002. "Corporate ownership structure and the informativeness of accounting earnings in East Asia," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 33(3), pages 401-425, August.
    29. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, Elsevier, vol. 3(4), pages 305-360, October.
    30. Ozkan, Aydin & Ozkan, Neslihan, 2004. "Corporate cash holdings: An empirical investigation of UK companies," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2103-2134, September.
    31. Anderson, Ronald C & Reeb, David M, 2003. "Founding-Family Ownership, Corporate Diversification, and Firm Leverage," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 46(2), pages 653-84, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Orens, Raf & Reheul, Anne-Mie, 2011. "Do CEO Demographics Explain Cash Holdings in SMEs?," Working Papers, Hogeschool-Universiteit Brussel, Faculteit Economie en Management 2011/35, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    2. Feng-Li Lin, 2013. "Board Ownership and Firm Value in Taiwan - A Panel Smooth Transition Regression Model," Journal for Economic Forecasting, Institute for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 148-160, December.
    3. Crutchley, Claire E. & Minnick, Kristina, 2012. "Cash versus incentive compensation: Lawsuits and director pay," Journal of Business Research, Elsevier, Elsevier, vol. 65(7), pages 907-913.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:64:y:2011:i:7:p:757-764. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.