The value relevance of bank cash Holdings: The moderating effect of board busyness

Trinh, Vu Quang; Elnahass, Marwa; Cao, Ngan Duong

doi:10.1016/j.intfin.2021.101359

Cited by 7 publications

(3 citation statements)

References 95 publications

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“…Trinh et al (2020) find that busy boards significantly enhance a bank's financing capacity by lowering its cost of debt. Moreover, Quang Trinh et al (2021) find that having busy board outside members who are able to monitor free cash reserves more effectively can enhance public confidence.…”

Section: Busy Commissioners and Firm Performancementioning

confidence: 99%

Busy commissioners and firm performance: evidence from Indonesia

Trinugroho

Risfandy

Hanafi

et al. 2022

IJOEM

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PurposeUsing the Indonesian setting where the government formally limits the presence of busy commissioners, the authors investigate whether a board containing busy commissioners could be beneficial or detrimental for firm performance.Design/methodology/approachThe authors propose an econometric model focusing on the impact of busy commissioners on the firm's profitability. The authors are also interested in investigating whether the effect is different between small and large firms and between mature and non-mature firms. A sample of 392 Indonesian listed firms from 2014 to 2020 is used in this study.FindingsThe authors find a negative association between busyness and performance and this result is robust across different estimations and econometrics strategies. The authors also document that the negative impact of busy directors diminishes particularly in young and small firms. The authors also find that the impact is more pronounced in state-owned firms.Practical implicationsFrom a firm point of view, the result suggests that the companies should be aware that appointing busy commissioners in the board structure can detriment market-based performance. The listed firms should also understand that busy commissioners are inefficient, especially if these firms are large, mature and state-owned.Originality/valueTo the best of the authors’ knowledge, this is the first study investigating the relation between busy commissioners and performance by considering age, firm size and state-owned firms as a moderator in a sample of Indonesian listed firms.

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Section: Busy Commissioners and Firm Performancementioning

confidence: 99%

Busy commissioners and firm performance: evidence from Indonesia

Trinugroho

Risfandy

Hanafi

et al. 2022

IJOEM

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“…Value relevance testing has previously been conducted with risks associated with disclosure (Elshandidy & Zeng, 2021), intangible assets (Cordazzo & Rossi, 2020;Ji & Lu, 2014;Kumari & Mishra, 2021;Park & Jang, 2021), impairment loss goodwill value (Alshehabi et al, 2021), cash holding (Trinh et al, 2021), fair value accounting (Adwan et al, 2020), carbon disclosure (Jiang et al, 2021), integrated reporting disclosure (Cortesi & Vena, 2019), corporate social responsibility (Firmansyah & Yusuf, 2020;Govindan et al, 2021), intellectual capital (Firmansyah & Yusuf, 2020;Hayati et al, 2015;Vafaei et al, 2011), earnings management (Mostafa, 2017;Shan, 2015), corporate governance (Firmansyah & Yusuf, 2020;Shan, 2015), IFRS adoption (Alali & Foote, 2012;Cutillas-Gomariz et al, 2016;Elbakry et al, 2017;Garcia et al, 2017;Okafor et al, 2016;Srivastava & Muharam, 2021;Tsalavoutas et al, 2012;Yuniarso & Lako, 2018), accounting firm size (Abdollahi et al, 2020;Lee & Lee, 2013), comprehensive income (Djaballah & Fortin, 2021;Khan et al, 2018), tax avoidance (Ariff & Hashim, 2014;Midiastuty et al, 2020), and corporate governance (Ariff & Hashim, 2014;Firmansyah & Yusuf, 2020).…”

Section: Introductionmentioning

confidence: 99%

Value relevance of IFRS 9 adoption: A case study of Indonesian banking companies

Firmansyah

Kurniawati

Miftah

et al. 2023

JAI

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Research aims: This study examines the effect of allowance for impairment losses (CKPN) on value relevance.Design/Methodology/Approach: This research employed quantitative data using secondary data from banking financial reports derived from www.idx.co.id during 2019-2021. Also, this study used stock price data sourced from www.finance.yahoo.co.id. The use of data for 2020 was due to the first year of PSAK 71 implementation. While data for 2019 were employed to compare the year before the PSAK 71 implementation, and data for 2021 were used to compare the PSAK 71 implementation in the second year. Data testing was then performed utilizing multiple linear regression analysis for cross-section data.Research findings: This study suggests that CKPN was positively associated with the value relevance of earnings in the first year of PSAK 71 implementation.Theoretical contribution/Originality: This research is expected to complement the financial accounting literature on adopting IFRS 9, especially in Indonesia, which is rarely discussed in previous studies.Practitioner/Policy implication: This study is expected to be employed by the Indonesian Financial Services Authority in improving policies on financial stability in the capital market based on applying financial accounting standards.Research limitation/Implication: This study only employed data on banking sub-sector companies listed on the Indonesia Stock Exchange, which were relatively small in number. Future research can therefore use data from all financial companies in Indonesia or banking companies in other countries related to IFRS 9 implementation to compare the test results with this study.

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“…In the wake of the financial crisis, the need for banks to hold cash has also become more significant (Fernandes et al , 2021) because excess reserves are needed to reduce the cost of meeting the requirements to enable the banks to mitigate the liquidity risk from the crisis. For Islamic banks, the restricted access to market resources may trigger them to hold excess cash to overcome liquidity challenges and reduce insolvency and credit risks (Trinh et al , 2021). The accumulation of cash is a measure of liquidity transformation activities in banks as managing liquidity risk is an important agenda.…”

Section: Introductionmentioning

confidence: 99%

Corporate sustainability commitment and cash holding: evidence from Islamic banks in Malaysia

Muhmad

Ariff

Majid

et al. 2022

JIABR

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Purpose This paper aims to examine the association between corporate sustainability commitment and cash holding and whether the board’s leadership competency moderates the association. Design/methodology/approach The sample consisted of Islamic banks in Malaysia from 2017 to 2019. The sustainability commitment was measured based on the dimensions of the economic, social and environment of the Sustainable Development Goals (SDG). Findings The sustainability commitment of the Islamic banks are low. The regression results are not supportive of the hypotheses on the association between corporate sustainability commitment and cash holding and the moderating effect of board’s leadership competency. Research limitations/implications The Islamic banks in Malaysia are still in their early stages to achieve the SDGs, but the trend of disclosure suggests that they are gradually embracing the commitment to sustainability practices. It is in support of the agency theory, with findings indicating greater agency cost that is perceived upon companies with greater sustainability commitments. Originality/value This paper integrates the dimensions of the SDG with the value-based intermediation guideline by Bank Negara Malaysia in measuring sustainability commitment of Islamic banks.

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The value relevance of bank cash Holdings: The moderating effect of board busyness

Cited by 7 publications

References 95 publications

Busy commissioners and firm performance: evidence from Indonesia

Busy commissioners and firm performance: evidence from Indonesia

Value relevance of IFRS 9 adoption: A case study of Indonesian banking companies

Corporate sustainability commitment and cash holding: evidence from Islamic banks in Malaysia

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