IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/halshs-00162404.html
   My bibliography  Save this paper

Cash holdings, corporate governance and financial constraints

Author

Listed:
  • Edith Ginglinger

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Khaoula Saddour

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

We examine the relation between cash holdings, quality of governance and financial constraints. We find that firms with strong shareholder rights hold more cash, contrary to the predictions of agency theory. This result is partly due to the positive correlation that exists between governance quality measures and the degree of financial constraint faced by the firm. We show that governance quality has no impact on cash holdings by financially unconstrained firms. It does, however, have a positive impact on the cash holdings of certain financially constrained firms, particularly family firms. Anti-takeover provisions give these firms extra flexibility, enabling them to issue shares without the founding family losing control, and provide an alternative to high cash holdings.

Suggested Citation

  • Edith Ginglinger & Khaoula Saddour, 2007. "Cash holdings, corporate governance and financial constraints," Working Papers halshs-00162404, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00162404
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00162404
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-00162404/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

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


    Cited by:

    1. Godfred A. Bokpin & Zangina Isshaq & Francis Aboagye‐Otchere, 2011. "Ownership structure, corporate governance and corporate liquidity policy," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 3(3), pages 262-279, August.
    2. repec:dau:papers:123456789/2940 is not listed on IDEAS
    3. Heru Fahlevi & Muhammad Arfan & Hafidah Hafidah, 2016. "The Influence of Dividend Payments, Profitability, Liquidity and Firm Size for Cash Holdings ? Case of Indonesian Manufacturing Companies," Proceedings of International Academic Conferences 4106579, International Institute of Social and Economic Sciences.
    4. repec:dau:papers:123456789/3031 is not listed on IDEAS
    5. Vikash Gautam & Ashish Singh & Sarthak Gaurav, 2014. "Cash Holdings and Finance Constraints in Indian Manufacturing Firms," Research in Applied Economics, Macrothink Institute, vol. 6(3), pages 56-75, September.
    6. Anggita Langgeng WIJAYA & BANDI, 2018. "The effect of corporate governance and accruals quality on the corporate cash holdings: study on the manufacturing companies in Indonesian Stock Exchange," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 16(151), pages 415-415.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00162404. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.