Corporate Governance, Cash Holdings, and Firm Value: Evidence from Japan
Qi Luo (luoqee@me.titech.ac.jp) and
Toyohiko Hachiya (thachiya@me.titech.ac.jp)
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Qi Luo: Department of Industrial Engineering & Management, Graduate School of Decision Science and Technology, Tokyo Institute of Technology, Japan
Toyohiko Hachiya: Department of Industrial Engineering & Management, Graduate School of Decision Science and Technology, Tokyo Institute of Technology, Japan
Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2005, vol. 08, issue 04, 613-636
Abstract:
This paper presents evidence on cash holdings for Japanese firms listed on the Tokyo Stock Exchange, focusing on the impact of corporate governance factors in cash holdings and the implication of cash holdings to firm value. We find that insider ownership and bank relations of firms play a significant role in determining cash holdings. Our results indicate that foreign stockholders select profitable firms to invest, and these firms have higher levels of cash. We document evidence that cash holdings lead to agency problems and impact firm value negatively, and governance characteristics affect the negative relation between cash holdings and firm value.
Keywords: Corporate governance; cash holdings; firm value; Japan (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (32)
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DOI: 10.1142/S0219091505000580
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