 Corporate Governance and the Value of Excess Cash Holdings of Large European FirmsMarc B.J. Schauten, Dick van Dijk and Jan†Paul van der Waal European Financial Management, 2013, vol. 19, issue 5, 991-1016 Abstract: We examine the relation between the quality of corporate governance and the value of excess cash for large publicly listed European firms from common†law and civil†law countries. Besides different law origins, we distinguish different dimensions of corporate governance by using ratings for the quality of Shareholder rights, Takeover defences, Disclosure and Board structure. We find that the value of excess cash is positively related to the Takeover defences score only. This finding is mainly driven by firms from common†law countries. If we focus on changes in the level of excess cash, we do find significant effects for civil†law country firms, where the marginal value of €1 of excess cash in a poorly governed firm is only €0.78 while the value is €1.10 for a good governed firm. We furthermore show that the spending of excess cash by poorly governed firms has a negative impact on their operating performance. Date: 2013 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:eufman:v:19:y:2013:i:5:p:991-1016 Ordering information: This journal article can be ordered from Access Statistics for this article European Financial Management is currently edited by John Doukas More articles in European Financial Management from European Financial Management Association Contact information at EDIRC. |
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