Principal-principal conflicts and corporate cash holdings: Evidence from China

Khalil Jebran, Shihua Chen and Muhammad Zubair Tauni

Research in International Business and Finance, 2019, vol. 49, issue C, 55-70

Abstract: The study investigates the effect of principal-principal (PP) conflicts on corporate cash holdings. By examining a sample of Chinese listed firms over the period 2003–2016, we observe that PP conflicts are positively associated with cash holdings. Furthermore, we observe that institutional ownership attenuates the positive association between PP conflicts and cash holdings. Additional analysis reveals that the positive effect of PP conflicts on cash holdings is more pronounced for firms with high cash holdings than for those with low cash holdings. Overall, the results support the argument that controlling shareholders expropriate minority shareholders by holding larger cash reserves.

Keywords: Principal-principal conflicts; Cash holdings; Institutional ownership; China (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:49:y:2019:i:c:p:55-70

DOI: 10.1016/j.ribaf.2019.02.010

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