Female CFOs and corporate cash holdings: Precautionary motive or agency motive?

Xu, Xingkai; Li, Wanli; Li, Yaoqin; Xing, Liu

doi:10.1016/j.iref.2019.05.006

Cited by 56 publications

(38 citation statements)

References 57 publications

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“…The literature on the determinants of corporate cash holdings has mainly focused on the firm-specific factors such as firm size, leverage, capital expenditure, investment opportunities, working capital, and profitability (Chireka & Fakoya, 2017: Kasongo, 2019. Other studies have also found that behavioral characteristics of managers (Florackis & Sainani, 2018;Xu et al, 2019) and institutional factors such as national culture, corporate governance, and investor and creditor protection (Seifert & Gonenc, 2016; Orlova et al, 2017; Graham & Leary, 2018) determine corporate cash holdings. However, there is a paucity of literature investigating corporate life cycle as a determinant of cash holdings.…”

Section: Literature Reviewmentioning

confidence: 99%

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Corporate life cycle and cash holding decisions: A South African study

Chireka

2020

Investment Management and Financial Innovations

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The resource-based view theory suggests that as firms’ resource bases differ along the corporate life cycle, even corporate policies such as cash holdings vary along the life cycle. This study seeks to understand the effect of firm’s life cycle on corporate cash holding behavior. Previous literature has sought to investigate the firm and institutional determinants of corporate cash holdings. Using the resource-based view theory, this study investigates whether corporate life cycle can be another determinant of corporate cash holdings. A panel data analysis of a sample of 112 Johannesburg Stock Exchange (JSE) listed firms from 2011 to 2018 is utilized to determine if firm’s life cycle does influence cash holding behavior. Dickinson’s cash flow analysis is used to proxy life cycle stages and control other known determinants of corporate cash holdings such as firm size, leverage, profitability, dividend payments, and growth opportunities. Contrary to other studies, this study finds no significant relationship between life cycle stages and corporate cash holdings, suggesting that corporate cash holdings for South African firms are driven by other factors other than life cycle resource allocations. However, it is found that prior year cash balances, firm size, and profitability have significant positive relationships with cash holdings. It is also found that liquid asset substitutes, leverage, and investment opportunities exert a significant and negative influence on corporate cash holdings.

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Section: Literature Reviewmentioning

confidence: 99%

“…Xu et al, 2019). The average leverage is 49%, suggesting that South African firms are highly levered compared to 22% for US firms and 34% for Jordanian firms.The mean for firm size is 15.48, signifying a good mix of large and small firms in the sample.…”

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confidence: 95%

Corporate life cycle and cash holding decisions: A South African study

Chireka

2020

Investment Management and Financial Innovations

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“…First, a major corporate governance issue currently facing organizations is the requirement to increase female representation on boards. In response, several studies (Adams & Ferreira, ; Campbell & Mínguez‐Vera, ; Gyapong, Ahmed, Ntim, & Nadeem, ; Gyapong et al, ; Liu et al, ; Nadeem, Suleman, & Ahmed, ; Xu, Li, Li, & Liu, ) have investigated the firm value implications of women on boards. Nevertheless, these studies mainly focus on financial returns and ignore the needs of other stakeholders that may be interested in value creation other than financial returns.…”

Section: Introductionmentioning

confidence: 99%

Board gender diversity and environmental, social, and economic value creation: Does family ownership matter?

2019

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Prior literature on firm value creation for stakeholders has oversimplified and narrowed the concept of value down to “economic returns.” Although economic returns are fundamental to a firm's core stakeholders (i.e., shareholders), other legitimate stakeholders want “value” beyond economic returns. We define stakeholder value as the financial and nonfinancial returns a firm can offer to its legitimate stakeholders, and empirically investigate whether board gender diversity (BGD) improves our multidimensional measure of value. Using Thomson Reuters' ASSET4 data for U.K.‐listed firms available from Eikon for the period 2007–2017, we report a significant positive relationship between BGD and stakeholder value creation. In particular, BGD increases social and environmental value creation in addition to economic returns. Furthermore, our results suggest that even though gender‐diverse boards are associated with stakeholder value creation in family firms, this is only conspicuous for environmental value creation. The findings suggest that although female directors cater to the interests of broader stakeholder groups, family ownership causes them to mainly focus on environmental stakeholders. The study provides important implications for regulators, stakeholders, and academic scholars.

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“…It increases the need for the provision of liquidity accumulations as a precaution in order to cope with an unpredictable decline in results and to hedge risks. This idea has already been introduced by Xi et al (2019), who note that women-led enterprises hold more liquidity, which fosters the explanation based on precautionary savings. This result is also consistent with the majority of previous studies, namely Huang and Kisgen (2013); Faccio et al(2016); Adhikari et al(2016);Mateos de Cabo et al (2012) and , who predict that the risk is significantly lower for women, since they tend to avoid risky financial investment opportunities.…”

Section: Test Of Hypothesismentioning

confidence: 96%

The Moderating Effect of the Presence of Female Executives on the Relationship Between Accounting Conservatism and Cash Holdings

Chaieb

2021

ijafr

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This paper aims to providing evidence for a relationship that could be established between accounting conservatism and cash holdings and to integrating the moderating effect of the presence of women directors on this relationship. The study was carried out on a sample of 100 French companies listed in the SBF120 index over a 5 year period. In general, the results show that the effect of accounting conservatism on the holding of liquidity is positive and significant and that the role of female administrators reinforces this relationship.

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Female CFOs and corporate cash holdings: Precautionary motive or agency motive?

Cited by 56 publications

References 57 publications

Corporate life cycle and cash holding decisions: A South African study

Corporate life cycle and cash holding decisions: A South African study

Board gender diversity and environmental, social, and economic value creation: Does family ownership matter?

The Moderating Effect of the Presence of Female Executives on the Relationship Between Accounting Conservatism and Cash Holdings

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