publication . Article . 2005

Corporate Governance, Cash Holdings, and Firm Value: Evidence from Japan

Qi Luo; Toyohiko Hachiya;
Open Access
  • Published: 01 Jan 2005 Journal: Review of Pacific Basin Financial Markets and Policies, volume 8, issue 4, pages 613-636
<jats:p> This paper presents evidence on cash holdings for Japanese firms listed on the Tokyo Stock Exchange, focusing on the impact of corporate governance factors in cash holdings and the implication of cash holdings to firm value. We find that insider ownership and bank relations of firms play a significant role in determining cash holdings. Our results indicate that foreign stockholders select profitable firms to invest, and these firms have higher levels of cash. We document evidence that cash holdings lead to agency problems and impact firm value negatively, and governance characteristics affect the negative relation between cash holdings and firm value. <...
free text keywords: Corporate governance, cash holdings, firm value, Japan, jel:G1, jel:G2, jel:G3, Economics and Econometrics, Finance
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