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International Evidence on Cash Holdings and Expected Managerial Agency Problems

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  • Ivalina Kalcheva
  • Karl V. Lins

Abstract

This article uses managerial control rights data for over 5000 firms from 31 countries to examine the net costs and benefits of cash holdings. We find that when external country-level shareholder protection is weak, firm values are lower when controlling managers hold more cash. Further, when external shareholder protection is weak we find that firm values are higher when controlling managers pay dividends. Only when external shareholder protection is strong do we find that cash held by controlling managers is unrelated to firm value, consistent with generally prevailing U.S. and international evidence. , Oxford University Press.

Suggested Citation

  • Ivalina Kalcheva & Karl V. Lins, 2007. "International Evidence on Cash Holdings and Expected Managerial Agency Problems," Review of Financial Studies, Society for Financial Studies, vol. 20(4), pages 1087-1112.
  • Handle: RePEc:oup:rfinst:v:20:y:2007:i:4:p:1087-1112
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    File URL: http://hdl.handle.net/10.1093/rfs/hhm023
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