Cash and Ownership on Firms Market Value: Evidence from Greek Panel Data
Stavros E. Arvanitis,
Theodoros V. Stamatopoulos and
International Journal of Economics & Business Administration (IJEBA), 2017, vol. V, issue 1, 70-91
We implement panel data econometrics on non-linear empirical models to investigate how the firms' market value is related with cash holdings and ownership concentration, on non-financial listed companies in Greece, before (2000-2009) and during the Eurozone crisis 2010-2015. It is confirmed the existence of an optimum level of cash (CASH) and the top 5 major shareholders ownership (OWN5) at which firms' return on equity (ROE) has been maximized (concave function), especially over the crisis period and the total one. Yet, a convex function of the Tobin's Q ratio (Q) on OWN5 has also been revealed significant for all sample periods. The findings support the tradeoff theory and the new kind of agency cost literature on expropriation effects of the minority by the majority. Interaction terms have also been found statistically significant, confirming that the special context of the Eurozone has influenced business, in the narrow Athens Stock Exchange (ASE). The estimated averages that maximize firms' market values (for instance ROE), in relation to either CASH (0.83 of net assets, during the whole sample period 2000-'15, while 0.77 in the crisis one 2010-'15) or OWN5 (0.10 of equity, during 2000-'15, while 0.36 in the crisis one 2010-'15) could be useful for both investors and policy makers in Greece, a member-country of â€œsui generisâ€ Eurozone, with an unsustainable public debt.
Keywords: Corporate finance; Cash management; Corporate ownership concentration; Agency theory; Expropriation effects; Tradeoff theory. (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:v:y:2017:i:1:p:70-91
Access Statistics for this article
More articles in International Journal of Economics & Business Administration (IJEBA) from International Journal of Economics & Business Administration (IJEBA)
Bibliographic data for series maintained by Marios Agiomavritis ().