 The value relevance of bank cash Holdings: The moderating effect of board busynessVu Quang Trinh, Marwa Elnahass and Ngan Duong Cao Journal of International Financial Markets, Institutions and Money, 2021, vol. 73, issue C Abstract: This study examines the value relevance of bank cash holdings information and the moderating effect of board outside multiple directorships on such relevance. Our sample is based on a dual-banking system (i.e., conventional and Islamic banks) which represents 70 listed banks for the period from 2010 to 2018. On average, our analysis indicates that investors negatively value banks’ holdings of large free cash flow. However, having busy board outside members, who are able to monitor that free cash reserves more effectively, tends to enhance the public confidence and in turn, cancel out the negative value relevance of cash holding information. Moreover, the predicted reputational benefits of appointing busy directors are not prevalent in the context of Islamic banking, which requires stricter monitoring by boards due to the complex business model adopted, distinctive systems of governance, and higher agency conflicts when compared to conventional banking. Keywords: Board busyness; Value relevance; Cash holdings; Islamic banks; Conventional banks (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:73:y:2021:i:c:s1042443121000780 DOI: 10.1016/j.intfin.2021.101359 Access Statistics for this article Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely More articles in Journal of International Financial Markets, Institutions and Money from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.