The value of excess cash and corporate governance: Evidence from US cross-listings

Frésard, Laurent; Salva, Carolina

doi:10.1016/j.jfineco.2010.04.004

Cited by 269 publications

(218 citation statements)

References 42 publications

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“…This literature recognizes the importance of corporate governance and financial reporting information in mitigating the value destruction associated with cash holdings (e.g. Chen, Harford, & Lin, 2015;Dittmar & Mahrt-Smith, 2007;Frésard & Salva, 2010;Louis et al, 2012;Masulis et al, 2009). We extend this understanding of mitigating influences by revealing that non-financial disclosures also help mitigate the value destruction associated with cash holdings.…”

Section: Introductionmentioning

confidence: 80%

“…Recent studies find that investors value a firm's cash holdings at a sizable discount (e.g. Arena & Julio, 2015;Faulkender & Wang, 2006;Frésard & Salva, 2010;Masulis, Wang, & Xie, 2009) and suggest that high-quality financial disclosure can facilitate monitoring to mitigate the value destruction associated with cash holdings (e.g. Drobetz, Grüninger, & Hirchvogl, 2010;Louis, Sun, & Urcan, 2012).…”

Section: Introductionmentioning

confidence: 99%

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Corporate Social Responsibility Disclosure and the Value of Cash Holdings

Shailer

2016

European Accounting Review

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This study investigates whether corporate social responsibility (CSR) reports mitigate the value destruction associated with increases in cash holdings. We find that the issuance of a standalone CSR report increases the marginal value of cash holdings and this effect is more pronounced for firms in a less transparent information environment and for firms with weaker external monitoring. Our results suggest that information in CSR reports can facilitate monitoring and thus induce more efficient use of cash holdings.

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Section: Introductionmentioning

confidence: 80%

Section: Introductionmentioning

confidence: 99%

Corporate Social Responsibility Disclosure and the Value of Cash Holdings

Shailer

2016

European Accounting Review

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“…Doidge et al (2004) report Tobin's q ratios 16.5 per cent higher in firms that cross-list on a US stock exchange relative to matched non-cross-listed firms from the same country. Pinkowitz et al (2006) and Fre´sard and Salva (2009) provide evidence that cross-listing on a US exchange raises the valuation of cash holdings and that the premium in the value of cash enjoyed is sustained in the long run. The valuation effects are strongest for firms from countries with weak legal protection of shareholder rights, with one dollar of cash worth approximately the same amount in higher shareholder protection countries with highly developed financial markets but less than 65 cents in low protection countries where there is more risk (Pinkowitz et al, 2006).…”

Section: Firm Performance and Legal Protectionmentioning

confidence: 99%

Corporate governance, accounting and finance: A review

Brown¹,

Beekes²,

Verhoeven³

2010

Accounting &Amp; Finance

491

410

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We review accounting and finance research on corporate governance (CG). In the course of our review, we focus on a particularly vexing issue, namely endogeneity in the relationships between CG and other matters of concern to accounting and finance scholars, and suggest ways to deal with it. Given the advent of large commercial CG databases, we also stress the importance of how CG is measured and in particular, the construction of CG indices, which should be sensitive to local institutional arrangements, and the need to capture both internal and external aspects of governance. The 'stickiness' of CG characteristics provides an additional challenge to CG scholars. Better theory is required, for example, to explain whether various CG practices substitute for each other or are complements. While a multidisciplinary approach to developing better theory is never without its difficulties, it could enrich the current body of knowledge in CG. Despite the vastness of the existing CG literature, these issues do suggest a number of avenues for future research.

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“…It is only when there is strong legal protection for shareholders that corporate governance has no impact on the value of cash holdings. Fresard and Salva (2010) adopt a slightly different approach by examining the impact of cross-listing on US exchanges on the value of cash of non-US firms. The legal protection for investors in the US provides a stronger system of corporate governance in the US than in firms' domestic countries.…”

Section: Cross-country Analysismentioning

confidence: 99%

Corporate cash holdings: Causes and consequences

Amess

Banerji

Lampousis

2015

International Review of Financial Analysis

135

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The considerable growth in corporate cash holdings around the world has prompted scholarly interest. Consequently, there is now a large academic literature examining cash holdings and their impact on corporate outcomes and firm values. This article reviews and synthesizes the literature to offer insight into two primary motives to hold cash: precautionary and agency. We first present a stylized model that explores the trade-off in holding cash between these two motives and then examine empirical studies to determine how existing theories are supported by evidence using data from a variety of countries. In addition, we examine the effectiveness of a variety of corporate governance devices in curtailing cash holdings and also the extent to which these devices offer investors' confidence that cash will not be wasted. Finally, we discuss methodological and measurement issues associated with empirical cash holdings studies. JEL classification: G30; G32

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The value of excess cash and corporate governance: Evidence from US cross-listings

Cited by 269 publications

References 42 publications

Corporate Social Responsibility Disclosure and the Value of Cash Holdings

Corporate Social Responsibility Disclosure and the Value of Cash Holdings

Corporate governance, accounting and finance: A review

Corporate cash holdings: Causes and consequences

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