Corporate governance and cash holdings: Family versus non-family controlled firms

We examine the impact of corporate governance on cash holdings and the interplay of family ownership on this relationship through static and dynamic panel estimation models. Composite indicator for the corporate governance based on several proxies related to corporate board structure and ownership i...

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Autores principales:	Rauf Gul, Sabeeh Ullah, Ajid Ur Rehman, Shahzad Hussain, Mehtab Alam
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2020
Materias:	cash holdings corporate governance family and non-family firms pakistan stock exchange Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/44153a29319d46819f662ed1a06156c2
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spelling	oai:doaj.org-article:44153a29319d46819f662ed1a06156c22021-12-02T18:23:50ZCorporate governance and cash holdings: Family versus non-family controlled firms2331-197510.1080/23311975.2020.1854562https://doaj.org/article/44153a29319d46819f662ed1a06156c22020-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2020.1854562https://doaj.org/toc/2331-1975We examine the impact of corporate governance on cash holdings and the interplay of family ownership on this relationship through static and dynamic panel estimation models. Composite indicator for the corporate governance based on several proxies related to corporate board structure and ownership is constructed using principal component analysis (PCA). Our evidence is based on a sample of 120 publicly listed non-financial firms from Pakistan Stock Exchange (PSX) over the period 2013–2017. The selected sample is further divided into family and non-family firms based on 10% or more ownership. We document the negative impact of corporate governance on cash holdings. The findings reveal that family ownership as a moderator weakens the impact of corporate governance mechanism on cash holdings. The analysis of individual proxies of corporate governance and cash holdings in the whole sample, as well as sub-sample, provides some new insights that family firms with more board size, board independence, and institutional shareholdings hold more cash as compared to non-family firms. The study theoretically supports the agency theory. The study suggests that individual market participants may make investment decisions thereby keeping in view the role of family ownership. The study also provides better insights to regulatory authorities to design policies in such a way that ensure the protection of minority shareholders as corporate cash holdings decisions are different in family and non-family firms.Rauf GulSabeeh UllahAjid Ur RehmanShahzad HussainMehtab AlamTaylor & Francis Grouparticlecash holdingscorporate governancefamily and non-family firmspakistan stock exchangeBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 7, Iss 1 (2020)
institution	DOAJ
collection	DOAJ
language	EN
topic	cash holdings corporate governance family and non-family firms pakistan stock exchange Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	cash holdings corporate governance family and non-family firms pakistan stock exchange Business HF5001-6182 Management. Industrial management HD28-70 Rauf Gul Sabeeh Ullah Ajid Ur Rehman Shahzad Hussain Mehtab Alam Corporate governance and cash holdings: Family versus non-family controlled firms
description	We examine the impact of corporate governance on cash holdings and the interplay of family ownership on this relationship through static and dynamic panel estimation models. Composite indicator for the corporate governance based on several proxies related to corporate board structure and ownership is constructed using principal component analysis (PCA). Our evidence is based on a sample of 120 publicly listed non-financial firms from Pakistan Stock Exchange (PSX) over the period 2013–2017. The selected sample is further divided into family and non-family firms based on 10% or more ownership. We document the negative impact of corporate governance on cash holdings. The findings reveal that family ownership as a moderator weakens the impact of corporate governance mechanism on cash holdings. The analysis of individual proxies of corporate governance and cash holdings in the whole sample, as well as sub-sample, provides some new insights that family firms with more board size, board independence, and institutional shareholdings hold more cash as compared to non-family firms. The study theoretically supports the agency theory. The study suggests that individual market participants may make investment decisions thereby keeping in view the role of family ownership. The study also provides better insights to regulatory authorities to design policies in such a way that ensure the protection of minority shareholders as corporate cash holdings decisions are different in family and non-family firms.
format	article
author	Rauf Gul Sabeeh Ullah Ajid Ur Rehman Shahzad Hussain Mehtab Alam
author_facet	Rauf Gul Sabeeh Ullah Ajid Ur Rehman Shahzad Hussain Mehtab Alam
author_sort	Rauf Gul
title	Corporate governance and cash holdings: Family versus non-family controlled firms
title_short	Corporate governance and cash holdings: Family versus non-family controlled firms
title_full	Corporate governance and cash holdings: Family versus non-family controlled firms
title_fullStr	Corporate governance and cash holdings: Family versus non-family controlled firms
title_full_unstemmed	Corporate governance and cash holdings: Family versus non-family controlled firms
title_sort	corporate governance and cash holdings: family versus non-family controlled firms
publisher	Taylor & Francis Group
publishDate	2020
url	https://doaj.org/article/44153a29319d46819f662ed1a06156c2
work_keys_str_mv	AT raufgul corporategovernanceandcashholdingsfamilyversusnonfamilycontrolledfirms AT sabeehullah corporategovernanceandcashholdingsfamilyversusnonfamilycontrolledfirms AT ajidurrehman corporategovernanceandcashholdingsfamilyversusnonfamilycontrolledfirms AT shahzadhussain corporategovernanceandcashholdingsfamilyversusnonfamilycontrolledfirms AT mehtabalam corporategovernanceandcashholdingsfamilyversusnonfamilycontrolledfirms
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Corporate governance and cash holdings: Family versus non-family controlled firms

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