The Determinants of Corporate Cash Holdings: The Case of Listed Companies in Taiwan
Date Issued
2013
Date
2013
Author(s)
Chien, Yu-Man
Abstract
This study investigates the determinants of corporate cash holdings, and we
separate the determinants into two main reasons: corporate characteristics and corporate
governance factors. We use the regression models which are based on the Opler,
Pinkowitz, Stulz and Williamson (1999) model. We get the sample from 1991 to 2011,
and exclude the financial firms and omit the data which doesn’t provide enough
information. There are three motives for companies to hold more money which are
transaction, precautionary and agency motives.
The empirical results show that firms with strong growth opportunities, smaller size,
higher cash flow, higher r&d, dividends payer, negative net income and face riskier cash
flow volatility may tend to hold higher cash ratio. On the other hand, firms with higher
net working capital, higher capital expenditure, higher leverage, and IPO in five years
may tend to hold lower cash rati o. In addition, we find that there is non-monotonic relation
between managerial ownership and cash holdings. When managers hold more shares,
they prefer to accumulate cash to meet their own benefits. However, after they hold more
shares, they tend to put the firms value at first place that they may hold less cash at the
same time. We also find when companies have controlling shareholders, they will
influence the decisions made by the board so that they can pursue their own benefits. We
find that whether CBO is also the CEO in the company is non-significant.
Subjects
現金持有
成長機會
經理人持股
公司治理
Type
thesis
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