CFO social capital, liquidity management, and the market value of cash✰

Christopher W. Anderson, M. Babajide Wintoki and Yaoyi Xi

Journal of Banking & Finance, 2024, vol. 163, issue C

Abstract: We find that firms with CFOs who have extensive social connections within the finance industry hold less precautionary cash. CFO connections matter more than CEO connections, reflecting the preeminence of CFOs among C-level executives in cash management and negotiating access to corporate finance. Firms reduce the proportion of assets held in cash by seven percentage points in the two years following CFO turnover and the appointment of a CFO with finance industry connections. The stock market valuation of incremental cash holdings of firms with well-connected CFOs is lower than for other firms, consistent with investor recognition of CFO social capital as an alternative means to address constraints on external capital.

Keywords: CFO; Networks; Cash management; Information asymmetry; Value of cash; Social capital (search for similar items in EconPapers)
JEL-codes: G32 M12 M41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426624000815
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:163:y:2024:i:c:s0378426624000815

DOI: 10.1016/j.jbankfin.2024.107163

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().