Does financial reporting regulation influence the value of cash holdings?

Karpuz, Ahmet; Kim, Kirak; Ozkan, Neslihan

doi:10.1016/j.jempfin.2020.09.004

Cited by 16 publications

(15 citation statements)

References 57 publications

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“…These costs could be costs to liquidate assets or raise funds from the capital market (Han & Qiu, 2007;Akhtar et al, 2018;Dimitropoulos et al, 2020). Then managers have motives to hold excess cash to make their payments and finance growth opportunities at a lower cost (Myers & Majluf, 1984;Karpuz, Kim, & Ozkan, 2020). Another motive is the precautionary motive which is regarded as a hedge against possible cash shortages (Lins, Servaes, & Tufano, 2010;Clarkson, Gao, & Herbohn, 2020).…”

Section: Motives Of Cash Holdingsmentioning

confidence: 99%

The Moderating Impact of Political Connections on the Relationship Between Cash Holdings and Firm Viability in Emerging Economies: Empirical evidence from Egypt

الشایب¹

2023

المجلة العلمیة للدراسات والبحوث المالیة والتجاریة

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The main purpose of this paper is to examine the impact of cash holdings on the viability of Egyptian listed firms. In addition, it investigates the moderating impact of political connections on the relationship between cash holdings and firm viability in the emerging market of Egypt. This study covers the period spanning 2014 to 2019. The results indicate that firms' cash holdings level has a significant positive impact on a firm's viability within Egyptian firms. Moreover, political connections variables after the Arab Revolution period were found to have no direct relationship with firms' viability. While the interaction between the first political connection measure; political connectivity and cash holdings have a significant negative impact on firm viability due to negative reactions from the market that tries to reduce corruption and improve its political environment. However, the interaction between cash holding and the second political connection measure; political strength, was found to have a significant positive impact on firm viability. This positive impact could be interpreted by using a different measure for political connection. Further, the increase in the number of politicians will support the good reputation of those firms in such period and its interaction with the cash would help improve firms' viability eventually. Cash holding might be a crucial mean of sustaining Egyptian firms' viability. This study provides useful managerial implications and contributes to the ongoing debate about the impact of cash holdings on corporate performance.

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Section: Motives Of Cash Holdingsmentioning

confidence: 99%

The Moderating Impact of Political Connections on the Relationship Between Cash Holdings and Firm Viability in Emerging Economies: Empirical evidence from Egypt

الشایب¹

2023

المجلة العلمیة للدراسات والبحوث المالیة والتجاریة

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“…More specifically, we examine the effect of ETF ownership on the value of cash holdings. Various studies (e.g., Faulkender & Wang, 2006; Karpuz et al, 2020) research the value of cash. We use the valuation model of Faulkender and Wang (2006).…”

Section: Further Analysesmentioning

confidence: 99%

ETF ownership and corporate cash holdings

Kalak

Tosun

2022

Euro Fin Management

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Do exchange-traded funds (ETFs) influence corporate cash holding decisions? Consistent with reduced managerial learning from the stock market and increased uncertainty due to higher ETF ownership, we show that firms included in ETF baskets have higher cash holdings as a precautionary response. We address endogeneity concerns through different natural experiments, namely, the reconstitution of the Russell 1000/2000 index and BlackRock's acquisition of iShares. We identify changes in revenue, external financing, share repurchases and net working capital as potential channels through which cash holdings increase due to higher ETF ownership, with cash holdings increases having a positive impact on firm value.

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“…More specifically, we examine the effect of ETF ownership on the value of cash holdings. Various studies (e.g., Faulkender & Wang, 2006;Karpuz et al, 2020) research the value of cash. We use the valuation model of Faulkender and Wang (2006).…”

Section: Value Of Cashmentioning

confidence: 99%