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The effects of country and firm-level governance on cash management

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  • Seifert, Bruce
  • Gonenc, Halit
Abstract
We examine the effects of both country and firm-level governance on cash holdings and the value of cash for a large international sample during the period 2002–2013. We find that both strong country and strong firm-level governance reduce the amount of cash holdings. We observe that a number of the components of both firm and country-level governance are significantly related to the decrease in cash holdings. We show that the value of cash increases as a result of good country-level governance and we provide mixed evidence that good firm-level governance also increases the value of cash. Our analysis also confirms that the payment of dividends adds to the value of cash.

Suggested Citation

  • Seifert, Bruce & Gonenc, Halit, 2018. "The effects of country and firm-level governance on cash management," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 52(C), pages 1-16.
    • Handle: RePEc:eee:intfin:v:52:y:2018:i:c:p:1-16
    DOI: 10.1016/j.intfin.2017.12.001
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    References listed on IDEAS

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    Cited by:

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    4. Thakur, Bhanu Pratap Singh & Kannadhasan, M., 2019. "Corruption and cash holdings: Evidence from emerging market economies," Emerging Markets Review, Elsevier, vol. 38(C), pages 1-17.
    5. Uddin, Md Hamid & Kabir, Sarkar Humayun & Hossain, Mohammed Sawkat & Wahab, Nor Shaipah Abdul & Liu, Jia, 2020. "Which firms do prefer Islamic debt? An analysis and evidence from global sukuk and bonds issuing firms," Emerging Markets Review, Elsevier, vol. 44(C).
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    8. Fatima Saleh Abd Almajeed Al-Hamshary & Akmalia M. Ariff & Khairul Anuar Kamarudin & Norakma Abd Majid, 2023. "Corporate Risk-Taking and Cash Holdings: The Moderating Effect of Investor Protection," Capital Markets Review, Malaysian Finance Association, vol. 31(1), pages 1-23.
    9. Ghada Tayem & Mohammad Tayeh, 2023. "Lines of Credit and Family Firms: The Case of an Emerging Market," IJFS, MDPI, vol. 11(2), pages 1-16, May.
    10. Li, Xiaodan & Pan, Zikui & Ho, Kung-Cheng & Bo, Yu, 2024. "Epidemics, local institutional quality, and corporate cash holdings," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 193-210.
    11. Tran, Quoc Trung, 2020. "Corruption and corporate cash holdings: international evidence," Journal of Multinational Financial Management, Elsevier, vol. 54(C).
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    More about this item

    Keywords

    Cash holdings; Value of cash; Corporate governance; Country governance; Dividend policy; Firm value;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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