Author
Saddour, Khaoula
Ginglinger, Edith
Type
Communication / Conférence
Item number of pages
33
Abstract (EN)
We examine the relation between cash holdings, quality of governance and financial
constraints. We find that firms with strong shareholder rights hold more cash, contrary to the
predictions of agency theory. This result is partly due to the positive correlation that exists
between governance quality measures and the degree of financial constraint faced by the firm.
We show that governance quality has no impact on cash holdings by financially
unconstrained firms. It does, however, have a positive impact on the cash holdings of certain
financially constrained firms, particularly family firms. Anti-takeover provisions give these
firms extra flexibility, enabling them to issue shares without the founding family losing
control, and provide an alternative to high cash holdings.