Cash holdings and employee welfare

Mohamed Ghaly, Viet Dang and Konstantinos Stathopoulos

Journal of Corporate Finance, 2015, vol. 33, issue C, 53-70

Abstract: This paper examines the relation between employee welfare practices and corporate cash holdings. We find firms that are strongly committed to employee well-being, measured by ratings on employee relations, to hold more cash. The effect of employee welfare standards on cash holdings is stronger for firms in human-capital-intensive, competitive, and high-labor-mobility industries in which employees are more important to their businesses. These results are consistent with the predictions of the stakeholder theory. Overall, our paper provides novel evidence on the role human capital and employee relations play in a firm's cash management policy.

Keywords: Cash holdings; Employee welfare; Implicit claims; Stakeholders; Human capital (search for similar items in EconPapers)
JEL-codes: G32 G34 M54 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (73)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:33:y:2015:i:c:p:53-70

DOI: 10.1016/j.jcorpfin.2015.04.003

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