The Impact of Boards of Directors’ Characteristics on Cash Holdings

Ayed Ahmad Khalifah Aizyadat

doi:doi:10.11648/j.ijfbr.20220802.11

| Peer-Reviewed

The Impact of Boards of Directors’ Characteristics on Cash Holdings

Ayed Ahmad Khalifah Aizyadat

Published in International Journal of Finance and Banking Research (Volume 8, Issue 2)

Received: 27 January 2022 Accepted: 15 February 2022 Published: 29 March 2022

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

This study examined the influence of corporate governance on company cash holding by explaining the relationship between board size, board independence, board gender and cash holding using a sample of 87 non-financial companies including industrial and service companies that listed on the Amman Stock Exchange from 2018 to 2020. By using random-effect generalized least square (GLS) regression model. The findings indicate that board size negatively influences cash holdings, while board gender has a positive association with cash holdings. Further, board independence did not have a direct effect on cash holdings in Jordan. This research contributes to the development of improved corporate governance policies that can help improve firm cash holdings. This study encourages Jordanian companies to use women who can give better monitoring services while also benefiting from their experiences. The results, which are robust to a range of alternative proxies and to additional tests, provide new insights into the determinants of level cash holdings.

Published in	International Journal of Finance and Banking Research (Volume 8, Issue 2)
DOI	10.11648/j.ijfbr.20220802.11
Page(s)	57-61
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Cash Holdings, Board Size, Board Independence, Board Gender, Jordan Stock Market

References

[1]	Adams, R., & Ferreira, D. (2007). A theory of friendly boards. Journal of Finance, 62, 217-250.
[2]	Ajanthan, A., & Kumara, K. U. (2017). Corporate governance and cash holdings: Empirical evidence from an emerging country, Sri Lanka. International Journal of Accounting and Financial Reporting, 7 (2), 112-128.‏
[3]	Alghadi, M. Y., Mazlan, A. R., & Azhari, A. (2019). The Impact of Board Gender and Multiple Directorship on Cash Holdings: Evidence from Jordan. International Journal of Finance and Banking Research, 5 (4), 71.‏
[4]	Allen, F. (2005). Corporate governance in emerging economies. Oxford Review of Economic Policy, 21 (2), 164-177.
[5]	Al-Najjar, B., & Clark, E. (2017). Corporate governance and cash holdings in MENA: Evidence from internal and external governance practices. Research in International Business and Finance, 39, 1-12.‏
[6]	Anderson, R. C., Sattar, M. A., & Reeb, D. M. (2004). Board characteristics, accounting report integrity, and the cost of debt. Journal of Accounting and Economics, 37 (3), 315-342.
[7]	Arguden, Y. (2012). Why Boards Need More Women. Retreived from https://hbr.org/2012/06/why-boards-need-more-women.
[8]	Atif, M., Liu, B., & Huang, A. (2019). Does board gender diversity affect corporate cash holdings?. Journal of Business Finance & Accounting, 46 (7-8), 1003-1029.‏
[9]	Bates, T. W., Kahle, K. M., & Stulz, R. M. (2009). Why do US firms hold so much more cash than they used to? The Journal of Finance, 64 (5), 1985-2021.
[10]	Boon, A. L., Field, L. C., Karpoff, J. M., & Raheja, C. G. (2007). The determinants of corporate board size and composition: An empirical analysis. Journal of Financial Economics, 85 (1), 66-101.
[11]	Byrd, J. W., & Hickman, K. A. (1992). Do outside directors monitor managers? Evidence from tender offer bids. Journal of Financial Economics, 32 (2), 195-222.
[12]	Cambrea, D. R., Calabrò, A., La Rocca, M., & Paolone, F. (2021). The impact of boards of directors’ characteristics on cash holdings in uncertain times. Journal of Management and Governance, 1-33.‏
[13]	Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity, and firm value. Financial review, 38 (1), 33-53.
[14]	Charness, G., & Gneezy, U. (2012). Strong evidence for gender differences in risk taking. Journal of Economic Behavior and Organization, 83 (1), 50-58.
[15]	Chen, I.-J., & Wang, B.-Y. (2014). Corporate governance and cash holdings: Empirical evidence from an emerging market. Paper presented at 41st conference southwestern finance association, USA. March 14, 2014.
[16]	Croson, R., & Gneezy, U. (2009). Gender differences in preferences. Journal of Economic Literature, 47 (2), 448-474.
[17]	Dittmar, A., Mahrt-Smith, J., & Servaes, H. (2003). International corporate governance and corporate cash holdings. Journal of Financial and Quantitative Analysis, 38 (1), 111-133.
[18]	Drobetz, W., & Grüninger, M. C. (2007). Corporate cash holdings: Evidence from Switzerland. Financial markets Portfolio, 21, 293-324.
[19]	Gill, A., & Shah, C. (2012). Determinants of corporate cash holdings: evidence from Canada. International Journal of Economics and Finance, 4 (1), 70-9.
[20]	Harford, J., Mansi, S. A., & Maxwell, W. F. (2008). Corporate governance and firm cash holdings in the US. Journal of financial economics, 87 (3), 535-555.‏
[21]	Jamil, S., Anwar, A., Afzaal, N., Tariq, A., & Asif, M. (2016). Determinants of corporate cash holdings: Empirical analysis of Pakistani firms. IOSR Journal of Economics and Finance, 7 (3), 29-35.‏
[22]	Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48 (3), 831-880.
[23]	Jurkus, A. F., Park, J. C., & Woodard, L. S. (2011). Women in top management and agency costs. Journal of Business Research, 64 (2), 180-186.
[24]	Kalcheva, I., & Lins, K. V. (2007). International evidence on cash holdings and expected managerial agency problems. Review of Financial Studies, 20 (4), 1087–1112.
[25]	Khan, Bibi, & Tanveer, (2016). THE IMPACT OF CORPORATE GOVERNANCE ON CASH HOLDINGS: A COMPARATIVE STUDY OF THE MANUFACTURING AND SERVICE INDUSTRY. Financial Studies, 20 (3).‏
[26]	Kuan, T. H., Li, C. S., & Liu, C. C. (2012). Corporate governance and cash holdings: A quantile regression approach. International Review of Economics & Finance, 24, 303-314.‏
[27]	Kusnadi, Y. (2011). Do corporate governance mechanisms matter for cash holdings and firm value?. Pacific-Basin Finance Journal, 19 (5), 554-570.
[28]	Lee, K. W. & Lee, C. F. (2009). Cash holdings, corporate governance structure and firm valuation. Review of Pacific Basin Financial Markets and Policies, 12 (3), 475-508.
[29]	Lipton, M., & Lorsch, J. W. (1992). A modest proposal for improved corporate governance, Business Lawyer, 48 (3), 59-77.
[30]	Maheshwari, Y., & Rao, K. V. (2017). Determinants of Corporate Cash Holdings. Global Business Review, 18 (2), 1-12.
[31]	Masood, A., & Shah, A. (2014). Corporate governance and cash holding in listed nonfinancial firms in Pakistan. Business Review, 9 (2), 48-71.
[32]	MengYun, W., Husnain, M., Sarwar, B., & Ali, W. (2021). Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms. Complexity, 2021.‏
[33]	Myers, S., & Rajan, R. (1998). The paradox of liquidity. Quarterly Journal of Economics, 113 (3), 733-771.
[34]	Opler, T., Pinkowitz, L., Stulz, R. M., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of Financial Economics, 52 (1), 3–46.
[35]	Ozkan, A., & Ozkan, N. (2004). Corporate cash holdings: An empirical investigation of UK companies. Journal of Banking & Finance, 28 (9), 2103-2134.
[36]	Pinkowitz, L., Stulz, R. M., & Williamson, R. (2006). Does the contribution of corporate cash holdings and dividends to firm value depend on governance? A cross-country analysis. Journal of Finance, 61 (6), 2725–2751.
[37]	Raheja, C. (2005). Determinant of board size and composition: a theory of corporate boards. Journal of Financial and Quantitative Analysis, 40 (2), 283-306.
[38]	Sarang, A. A., Aubert, N., & Hollandts, X. (2017). Board of Director’s Composition and Corporate Cash Holdings: Evidence from French Listed Companies. etrieved from: http://www.affi2017-uga.fr/program/1/142.pdf
[39]	Uyar, A., & Kuzey, C. (2014). Determinants of corporate cash holdings: evidence from the emerging market of Turkey. Applied Economics, 46 (9), 1035-1048.
[40]	Yermack, D. (1996). Higher market valuation of companies a small board of directors. Journal of Financial Economics, 40 (2), 185-202.

Cite This Article

Plain Text BibTeX RIS

APA Style

Ayed Ahmad Khalifah Aizyadat. (2022). The Impact of Boards of Directors’ Characteristics on Cash Holdings. International Journal of Finance and Banking Research, 8(2), 57-61. https://doi.org/10.11648/j.ijfbr.20220802.11

Copy | Download

ACS Style

Ayed Ahmad Khalifah Aizyadat. The Impact of Boards of Directors’ Characteristics on Cash Holdings. Int. J. Finance Bank. Res. 2022, 8(2), 57-61. doi: 10.11648/j.ijfbr.20220802.11

Copy | Download

AMA Style

Ayed Ahmad Khalifah Aizyadat. The Impact of Boards of Directors’ Characteristics on Cash Holdings. Int J Finance Bank Res. 2022;8(2):57-61. doi: 10.11648/j.ijfbr.20220802.11

Copy | Download

@article{10.11648/j.ijfbr.20220802.11,
  author = {Ayed Ahmad Khalifah Aizyadat},
  title = {The Impact of Boards of Directors’ Characteristics on Cash Holdings},
  journal = {International Journal of Finance and Banking Research},
  volume = {8},
  number = {2},
  pages = {57-61},
  doi = {10.11648/j.ijfbr.20220802.11},
  url = {https://doi.org/10.11648/j.ijfbr.20220802.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20220802.11},
  abstract = {This study examined the influence of corporate governance on company cash holding by explaining the relationship between board size, board independence, board gender and cash holding using a sample of 87 non-financial companies including industrial and service companies that listed on the Amman Stock Exchange from 2018 to 2020. By using random-effect generalized least square (GLS) regression model. The findings indicate that board size negatively influences cash holdings, while board gender has a positive association with cash holdings. Further, board independence did not have a direct effect on cash holdings in Jordan. This research contributes to the development of improved corporate governance policies that can help improve firm cash holdings. This study encourages Jordanian companies to use women who can give better monitoring services while also benefiting from their experiences. The results, which are robust to a range of alternative proxies and to additional tests, provide new insights into the determinants of level cash holdings.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Boards of Directors’ Characteristics on Cash Holdings
AU  - Ayed Ahmad Khalifah Aizyadat
Y1  - 2022/03/29
PY  - 2022
N1  - https://doi.org/10.11648/j.ijfbr.20220802.11
DO  - 10.11648/j.ijfbr.20220802.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 57
EP  - 61
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20220802.11
AB  - This study examined the influence of corporate governance on company cash holding by explaining the relationship between board size, board independence, board gender and cash holding using a sample of 87 non-financial companies including industrial and service companies that listed on the Amman Stock Exchange from 2018 to 2020. By using random-effect generalized least square (GLS) regression model. The findings indicate that board size negatively influences cash holdings, while board gender has a positive association with cash holdings. Further, board independence did not have a direct effect on cash holdings in Jordan. This research contributes to the development of improved corporate governance policies that can help improve firm cash holdings. This study encourages Jordanian companies to use women who can give better monitoring services while also benefiting from their experiences. The results, which are robust to a range of alternative proxies and to additional tests, provide new insights into the determinants of level cash holdings.
VL  - 8
IS  - 2
ER  -

Copy | Download

Author Information

Ayed Ahmad Khalifah Aizyadat

Department of Finance & Banking Science, Irbid National University, Irbid, Jordan

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Ayed Ahmad Khalifah Aizyadat. (2022). The Impact of Boards of Directors’ Characteristics on Cash Holdings. International Journal of Finance and Banking Research, 8(2), 57-61. https://doi.org/10.11648/j.ijfbr.20220802.11

Copy | Download

ACS Style

Ayed Ahmad Khalifah Aizyadat. The Impact of Boards of Directors’ Characteristics on Cash Holdings. Int. J. Finance Bank. Res. 2022, 8(2), 57-61. doi: 10.11648/j.ijfbr.20220802.11

Copy | Download

AMA Style

Ayed Ahmad Khalifah Aizyadat. The Impact of Boards of Directors’ Characteristics on Cash Holdings. Int J Finance Bank Res. 2022;8(2):57-61. doi: 10.11648/j.ijfbr.20220802.11

Copy | Download

@article{10.11648/j.ijfbr.20220802.11,
  author = {Ayed Ahmad Khalifah Aizyadat},
  title = {The Impact of Boards of Directors’ Characteristics on Cash Holdings},
  journal = {International Journal of Finance and Banking Research},
  volume = {8},
  number = {2},
  pages = {57-61},
  doi = {10.11648/j.ijfbr.20220802.11},
  url = {https://doi.org/10.11648/j.ijfbr.20220802.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20220802.11},
  abstract = {This study examined the influence of corporate governance on company cash holding by explaining the relationship between board size, board independence, board gender and cash holding using a sample of 87 non-financial companies including industrial and service companies that listed on the Amman Stock Exchange from 2018 to 2020. By using random-effect generalized least square (GLS) regression model. The findings indicate that board size negatively influences cash holdings, while board gender has a positive association with cash holdings. Further, board independence did not have a direct effect on cash holdings in Jordan. This research contributes to the development of improved corporate governance policies that can help improve firm cash holdings. This study encourages Jordanian companies to use women who can give better monitoring services while also benefiting from their experiences. The results, which are robust to a range of alternative proxies and to additional tests, provide new insights into the determinants of level cash holdings.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - The Impact of Boards of Directors’ Characteristics on Cash Holdings
AU  - Ayed Ahmad Khalifah Aizyadat
Y1  - 2022/03/29
PY  - 2022
N1  - https://doi.org/10.11648/j.ijfbr.20220802.11
DO  - 10.11648/j.ijfbr.20220802.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 57
EP  - 61
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20220802.11
AB  - This study examined the influence of corporate governance on company cash holding by explaining the relationship between board size, board independence, board gender and cash holding using a sample of 87 non-financial companies including industrial and service companies that listed on the Amman Stock Exchange from 2018 to 2020. By using random-effect generalized least square (GLS) regression model. The findings indicate that board size negatively influences cash holdings, while board gender has a positive association with cash holdings. Further, board independence did not have a direct effect on cash holdings in Jordan. This research contributes to the development of improved corporate governance policies that can help improve firm cash holdings. This study encourages Jordanian companies to use women who can give better monitoring services while also benefiting from their experiences. The results, which are robust to a range of alternative proxies and to additional tests, provide new insights into the determinants of level cash holdings.
VL  - 8
IS  - 2
ER  -

Copy | Download