Human capital quality and cash holdings

Harshali Damle and Rajesh Kumar Sinha

Journal of Contemporary Accounting and Economics, 2024, vol. 20, issue 3

Abstract: In this paper, we examine whether human capital quality affects firms’ cash holdings. Using a sample of U.S. firms from 1980 to 2022, we find that a one standard deviation increase in human capital quality is associated with an increase of 0.053 in the cash-to-total assets ratio. We also explore two channels—skilled labour risk and agency costs—through which human capital quality affects cash holdings. Further, using the hiring of a chief diversity officer as a proxy for a diverse and inclusive workforce, we find that firms that hire chief diversity officers have higher cash holdings.

Keywords: Cash holdings; Human Capital; Chief Diversity Officer (search for similar items in EconPapers)
JEL-codes: G32 J24 M14 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:20:y:2024:i:3:s1815566924000377

DOI: 10.1016/j.jcae.2024.100437

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