Do CEO characteristics impact corporate cash holdings? Insights from consumer goods companies listed on the Indonesia Stock Exchange

Muttaqin, Muhammad Sabil

doi:10.55584/gabs.002.02.5

Cited by 2 publications

(1 citation statement)

References 19 publications

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“…We implemented six proxies to measure female executives on boards of directors. Adopting the metrics used by Buchdadi et al (2023), Muttaqin (2023), Sabila et al (2023), and Ahmad et al (2022), we established a dummy variable labeled FEM1; a value of 1 was assigned if a company had female CEOs, and a value of 0 was assigned otherwise. The second proxy of female executives (FEM2) was also operationalized as a dummy variable (1 if the CFO is female and 0 otherwise) (Arun et al , 2015).…”

Section: Methodsmentioning

confidence: 99%

The role of female executives in capital structure decisions: evidence from a Southeast Asian country

Siregar,

Suherman,

Mahfirah

et al. 2023

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Purpose This study aims to investigate how the presence of female executives on the board affects a company’s capital structure decisions. The critical mass of female executives on the board was also considered to observe their impact on capital structure. Design/methodology/approach Samples were taken from nonfinancial sector companies listed on the Indonesia Stock Exchange between 2012 and 2021 (3,707 firm-year observations). Capital structure was measured using four approaches, namely, debt-to-total asset ratio (DAR), debt-to-equity ratio (DER), short-term debt-to-total assets (STD) and long-term debt-to-total assets (LTD). The data were analyzed using panel data regression analysis, including a fixed effects model with clustered standard errors. Findings The presence of female executives on the board is significantly negatively related to capital structure as measured by DER and STD. The critical mass of women provided no evidence of a relationship with a firm’s capital structure. Robustness checks were performed, and the results were consistent with those in the main analysis. Research limitations/implications Female executives can be appointed to management boards when determining a strategy to achieve the capital structure desired by a company. Originality/value This study increases the diversity of research in corporate governance by synthesizing various indicators from female executives into a single study to determine their relationships with companies’ capital structures. In addition, this study stands out by incorporating four distinct indicators for assessing capital structure and diverging from the norm observed in many other studies, many of which rely on just two indicators: DAR and DER. Moreover, it strongly emphasizes the unique economic, legal, social and cultural landscapes of developing countries like Indonesia in comparison to their developed counterparts, particularly Western nations.

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Section: Methodsmentioning

confidence: 99%

The role of female executives in capital structure decisions: evidence from a Southeast Asian country

Siregar,

Suherman,

Mahfirah

et al. 2023

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Is board gender diversity considered a signal of IPO quality? Evidence from Indonesia

Harjayanti,

Suherman,

Ahmad

2024

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Purpose This study investigated the impact of board gender diversity on initial public offering (IPO) underpricing in Indonesia. Additionally, the moderating role of Chief Executive Officer (CEO) ownership on the relationship between female executives and IPO underpricing was examined. Design/methodology/approach A sample of 384 IPO firms listed on the Indonesian stock exchange from 2010 to 2022 was used. Board gender diversity was measured using three approaches: the presence of female executives, percentage of female executives and number of female executives on the management board. CEO ownership was a dummy variable measured as 1 if the CEO owned shares of the company and 0 otherwise. IPO underpricing was measured as the ratio of the difference between the closing price and offer price to the offer price. This study used moderated multiple linear regression analysis. Findings The presence and number of female executives on the board of management were significantly and negatively associated with IPO underpricing. The moderating effect of CEO ownership on the relationship between IPO underpricing and board gender diversity was significant, as measured by the presence, percentage and number of female executives. Robustness checks were performed and the results were consistent with those of the main analysis. Research limitations/implications Recommendations for future studies include further exploration by comparing the nexus between board gender diversity and IPO underpricing in different sectors (nonfinancial IPO firms versus financial IPO firms). Nonfinancial IPO firms are less regulated compared with financial IPO firms so the degree of IPO underpricing between them may be quite different. Additionally, future research can use endogeneity tests such as instrumental variables (IVs) and propensity score matching. Endogeneity means that a regression is misspecified in a way that makes identifying a causal effect between two economic variables difficult, if not impossible. IVs are used to control for confounding and measurement errors in observational studies. Like propensity scores, IVs can adjust for both observed and unobserved confounding effects. Practical implications Managers and shareholders can adequately classify board gender diversity levels to improve a firm’s financial performance. Specifically, more gender-diverse boards can reduce IPO underpricing so that the firms can generate more cash when they sell their shares in the primary market. Policymakers and regulators can specify governance mechanisms to promote diversity on the management board because board diversity can carry the information, capabilities and experience of diverse group members, which will ultimately boost firm performance. Social implications The role of women in society may be boosted if such initiatives are taken to increase their representation in top jobs in society. Originality/value To the best of the authors’ knowledge, this study is among the first to investigate the moderating role of CEO ownership on the relationship between board gender diversity and IPO underpricing. This study increases the research on diversity in corporate governance by synthesizing various indicators for female executives into a single study to determine their relationships with IPO underpricing. Moreover, this study adds to the body of knowledge on signaling theory by providing empirical evidence on the relationship between female executives on management boards and IPO underpricing.

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Do CEO characteristics impact corporate cash holdings? Insights from consumer goods companies listed on the Indonesia Stock Exchange

Cited by 2 publications

References 19 publications

The role of female executives in capital structure decisions: evidence from a Southeast Asian country

The role of female executives in capital structure decisions: evidence from a Southeast Asian country

Is board gender diversity considered a signal of IPO quality? Evidence from Indonesia

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