Do board characteristics moderate the relationship between political connections and cash holdings? insight from Asian countries

Abdullah, Muhammad Arsalan Hashmi, Rayenda Brahmana and Humayun Fareeduddin
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Abdullah: Karachi Institute of Economics and Technology
Muhammad Arsalan Hashmi: Dow University of Health Sciences
Humayun Fareeduddin: Karachi Institute of Economics and Technology

International Journal of Disclosure and Governance, 2024, vol. 21, issue 4, No 8, 624-641

Abstract: Abstract This study investigates the impact of board characteristics on the relationship between political connections and cash holdings in Asian countries. The findings suggest that Asian firms with political connections, large boards, and gender diversity have lower cash holdings, while firms with CEO duality have higher cash holdings. Further, the study provides unique evidence that Asian firms with large boards and gender diversity have a moderating effect and strengthen the negative influence of political connections on cash holdings. We also find that CEO duality moderates the influence of political connections on cash holdings in Asian countries. The authors conclude that strong board monitoring and governance mechanisms are crucial for the effective use of cash, particularly in firms with political connections. This research contributes to the literature by presenting novel evidence that board characteristics critically influence the relationship between political connections and cash holdings in the Asian context.

Keywords: Political connections; Board size; Board gender diversity; CEO duality; Cash holdings (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41310-023-00218-z

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