Financial constraints, board governance standards, and corporate cash holdings

Choonsik Lee and Heungju Park

Review of Financial Economics, 2016, vol. 28, issue 1, 21-34

Abstract: This study examines whether financial constraints and board governance play substitution roles in lowering agency concerns in corporate cash holdings. Using four firm‐specific characteristics of financial constraints and 28 forward‐looking board governance standards, we find that board governance mitigates agency concerns in cash holdings more significantly for financially less‐constrained firms. Consistently, financially less‐constrained firms increase the level of board governance and adopt more board governance standards. A natural experiment with the 2007 financial crisis provides robustness to our findings. Our evidence suggests that financial constraints interrelate with the effectiveness of board governance on corporate cash holdings.

Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://doi.org/10.1016/j.rfe.2015.10.001

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:wly:revfec:v:28:y:2016:i:1:p:21-34

Access Statistics for this article

More articles in Review of Financial Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().