publication . Article . Other literature type . 2011

Governance mechanisms, investment opportunity set and SMEs cash holdings

Belghitar, Yacine; Khan, James;
Open Access
  • Published: 14 Sep 2011 Journal: Small Business Economics, volume 40, pages 59-72 (issn: 0921-898X, eissn: 1573-0913, Copyright policy)
  • Publisher: Springer Science and Business Media LLC
  • Country: United Kingdom
Abstract
This study analyses the effect of firm characteristics and governance mechanisms on cash holdings for a sample of UK SMEs. The results show that UK SMEs with greater cash flow volatility and institutional investors hold more cash; whereas levered and dividend paying SMEs with non-executive ownership hold less cash. We also find that ownership structure is significant only in explaining the cash holdings for firms with high growth investment opportunities, and leverage is only significant in explaining the cash held by firms with low growth investment opportunities. Our findings suggest that internal governance mechanisms are more effective for SMEs with high gro...
Subjects
free text keywords: Economics and Econometrics, General Business, Management and Accounting
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