 Corporate cash holdings and promoter ownershipC.P. Gupta and Prateek Bedi Emerging Markets Review, 2020, vol. 44, issue C Abstract: We examine the relationship between corporate cash holdings and promoter ownership for a sample of Indian non-financial firms. Consistent with the arguments of the ‘efficient monitoring hypothesis’, our results broadly suggest that promoter ownership is negatively associated with cash holdings, thereby highlighting the role of large owners in preventing cash accretion in an emerging market context. Indicating prominent influence of corporate ownership on cash management, we find that corporate non-promoter ownership is also negatively related with cash holdings. With regard to promoter ownership of foreign entities, our results suggest that cash holdings share a U-shaped relationship with ownership of foreign promoter corporations. In addition, our findings provide weak evidence to support a more pronounced negative association between cash holdings and promoter ownership for group-affiliated firms as compared to non-affiliated firms since the former faces lower financial constraints on account of access to internal capital markets. Finally, we perform long-term effect analysis in order to reinforce robustness of our results. Keywords: Corporate cash holdings; Promoter ownership; Agency theory; Dynamic panel regression; System GMM estimator; India (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:44:y:2020:i:c:s1566014120300303 DOI: 10.1016/j.ememar.2020.100718 Access Statistics for this article Emerging Markets Review is currently edited by Jonathan A. Batten More articles in Emerging Markets Review from Elsevier |
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