Corporate cash and governance: A global look into publicly-traded companies' aggregate cash ratios

Kei-Ichiro Inaba

International Review of Financial Analysis, 2021, vol. 78, issue C

Abstract: I conduct international panel-data regressions to investigate the determinants of cash holdings by publicly-traded firms for 20 countries over the period 2007–2017. The precautionary, transaction-costs, and agency motives explained ratios of the firms' aggregate cash to their total assets. On the last motive, higher cash ratios were associated with managers with worse ethical behavior, lower accountability, weaker investor protection, harsher auditing and reporting standards, and greater potential to face holdup problems by lending banks. The agency motive had a greater marginal impact than the precautionary and transaction-costs motives while having a limited explanatory power over total variation in the cash ratios.

Keywords: Corporate finance; Cash holdings; Precautionary saving motive; Corporate governance; Agency problem (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:78:y:2021:i:c:s1057521921001447

DOI: 10.1016/j.irfa.2021.101808

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