Financial Constraints, Board Governance Standards, and Corporate Cash Holdings
by Choonsik Lee, Heungju Park
ARTICLE | Review of Financial Economics | Vol. 28, 2016
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.
Popular Articles
-
International Student Profile: Kevin Kurnia
Oct 12 2017
-
PHBS Opening a Campus in UK: Se...
Feb 22 2017
-
PHBSers: Wishing You a Better Year Ahead!
Dec 30 2016
Latest News
-
Yeujun Yoon: Rise to Challenges and Find the True Calling
Time:Feb 23 2018
-
PHBS Exchange Students: Heavier Luggage, Fuller Hearts
Time:Jan 23 2018
-
PHBS 2018 Winter Camp: When Pyth...
Time:Jan 23 2018
Campus Events