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The governance role of multiple large shareholders: evidence from the valuation of cash holdings

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  • Najah Attig

    ()

  • Sadok El Ghoul

    ()

  • Omrane Guedhami

    ()

  • Sorin Rizeanu

    ()

Abstract

This paper investigates the governance role of multiple large shareholders (MLS, henceforth), as evidenced by their impact on the valuation of cash holdings. For a sample of 2,723 firms from 22 countries, we find that the presence of MLS enhances the valuation of firms’ cash holdings. In particular, we show that the valuation of cash is positively associated with an even distribution of blockholders’ voting rights and with higher contestability of the largest shareholder’s control. We also show that the impact of MLS on the valuation of cash holdings is more pronounced for family-controlled firms, consistent with investors perceiving family owners as associated with greater expropriation risk. Overall, our results contribute to the literature on corporate governance by showing that MLS improve internal monitoring and moderate the agency costs of firms’ cash holdings. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Najah Attig & Sadok El Ghoul & Omrane Guedhami & Sorin Rizeanu, 2013. "The governance role of multiple large shareholders: evidence from the valuation of cash holdings," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 419-451, May.
  • Handle: RePEc:kap:jmgtgv:v:17:y:2013:i:2:p:419-451 DOI: 10.1007/s10997-011-9184-3
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    1. repec:eee:corfin:v:44:y:2017:i:c:p:1-14 is not listed on IDEAS
    2. repec:kap:jmgtgv:v:21:y:2017:i:3:d:10.1007_s10997-016-9364-2 is not listed on IDEAS
    3. Mohamed Arouri & Guillaume Pijourlet, 2017. "CSR Performance and the Value of Cash Holdings: International Evidence," Journal of Business Ethics, Springer, vol. 140(2), pages 263-284, January.
    4. Lin, Tsui-Jung & Tsai, Han-Fang & Imamah, Nur & Hung, Jung-Hua, 2016. "Does the identity of multiple large shareholders affect the value of excess cash? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 40(PA), pages 173-190.
    5. Tristan Auvray & Olivier Brossard, 2013. "French connection: interlocking directorates and the ownership-control nexus in an insider governance system," CEPN Working Papers hal-00842582, HAL.

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