Navigating cash management: The role of board co-option

Wenqiong Liu, Ziqi Li and Ho-Chuan Huang

Pacific-Basin Finance Journal, 2025, vol. 89, issue C

Abstract: This study examines the impact of board co-option on cash holdings in Chinese listed firms. The results show that co-opted directors significantly increase corporate cash reserves. This effect is particularly strong in state-owned enterprises (SOEs), where co-opted boards further amplify cash accumulation. However, financial constraints attenuate this relationship. Moreover, the increase in cash reserves associated with board co-option is partially driven by enhanced firm profitability, highlighting its mediating role. These findings offer new insights into the governance mechanisms influencing cash management in China.

Keywords: Cash holdings; Board; Co-option (search for similar items in EconPapers)
JEL-codes: C23 G30 G34 G39 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:89:y:2025:i:c:s0927538x24003469

DOI: 10.1016/j.pacfin.2024.102594

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