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Stakeholder-centric corporate misconduct and financing policies: A precautionary tale

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  • Attig, Najah
  • El Ghoul, Sadok
  • Hossain, Ashrafee

Abstract

We investigate how stakeholder-centric corporate misconduct (CM) influences firms’ financing policies. CM is associated with higher cash holdings and lower dividend payouts and debt financing. These effects are more pronounced in firms with stronger governance. We further show that higher cash holdings in CM firms are associated with greater firm value and a lower implied cost of capital. Firms that replace their CEOs following CM adopt more conservative financing policies. Taken together, our evidence supports the precautionary motive for cash holdings, indicating that such reserves are unlikely to result from agency conflicts or increased managerial discretion in CM firms.

Suggested Citation

  • Attig, Najah & El Ghoul, Sadok & Hossain, Ashrafee, 2026. "Stakeholder-centric corporate misconduct and financing policies: A precautionary tale," Journal of Banking & Finance, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:jbfina:v:182:y:2026:i:c:s037842662500202x
    DOI: 10.1016/j.jbankfin.2025.107582
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    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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