The Relation between CEO-Friendly Boards and the Value of Cash Holdings
Abstract
:1. Introduction
2. Hypothesis Development
3. Data Description
3.1. Sample Construction
3.2. Measure of Board Friendliness
3.3. Descriptive Statistics
4. Empirical Results
4.1. Friendly Boards and Cash Holdings
4.2. The Value Impact of Friendly Boards on Cash Holdings
4.3. The Impact of Friendly Boards on the Use of Excess Cash
4.4. The Impact of Friendly Boards on Capital Expenditures
4.5. The Impact of Friendly Boards on Investment Efficiency
5. Conclusions
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
Appendix A. Definition of Variables
Variables | Definition |
Friendly board | Dummy variable equals one if at least one of the independent directors is socially connected to the CEO and zero otherwise as in Schmidt (2015) and Kang et al. (2018) (Data source: BoardEx) |
Cash holdings | Natural logarithm of the ratio of cash (CHE) to sales (SALE) |
→ ln(CHE/SALE) (Data source: Compustat) | |
Assets | Book value of total assets (AT) net of cash (CHE) in billions of dollars |
→ AT-CHE (Data source: Compustat) | |
NWC | Ratio of net working capital (current assets (ACT) − current liabilities (LCT) − cash (CHE)) to the book value of total assets (AT) net of cash (CHE) |
→ (ACT-LCT-CHE)/(AT-CHE) (Data source: Compustat) | |
Cash flow | Ratio of operating income before depreciation (OIBDP) after interest (XINT), taxes (TXT), and dividends (DVC) to the book value total assets (AT) net of cash (CHE) |
→ (OIBDP-XINT-TXT-DVC)/(AT-CHE) (Data source: Compustat) | |
Cash flow volatility | Mean of the standard deviations of cash flow (Ratio of operating income before depreciation (OIBDP) after interest (XINT), taxes (TXT), and dividends (DVC) to the book value total assets (AT) net of cash (CHE)) over the previous ten years and a minimum of five years for firms in the same industry, as defined by two-digit SIC codes as in Chen et al. (2020) (Data source: Compustat) |
Market-to-book | The book value of total assets (AT) net of cash (CHE) minus the book value of equity (CEQ) plus the market value of equity (CSHO*PRCC_F), divided by the book value of total assets (AT) net of cash (CHE) |
→ (AT-CHE-CEQ + CSHO*PRCC_F)/(AT-CHE) (Data source: Compustat) | |
Capital expenditures | Ratio of capital expenditures (CAPX) to the book value of total assets (AT) net of cash (CHE) |
→ CAPX/(AT-CHE) (Data source: Compustat) | |
Acquisitions expenditures | Ratio of acquisitions expenditures (AQC) to the book value of total assets (AT) net of cash (CHE) |
→ AQC/(AT-CHE) (Data source: Compustat) | |
Leverage | Sum of long-term debt (DLTT) and debt in current liabilities (DLC) divided by the book value of total assets (AT) net of cash (CHE) |
→ (DLTT + DLC)/(AT-CHE) (Data source: Compustat) | |
R&D | Ratio of research and development expenditures (XRD) to sales (SALE). If research and development expenditure is missing, the ratio is set equal to zero. |
→ XRD/SALE (Data source: Compustat) | |
Dividend | Indicator variable that equals one in years in which a firm pays a common dividend (DVC) and zero otherwise (Data source: Compustat) |
Institutional Ownership | The aggregate percentage ownership of shares held by institutional investors that own at least 5% of outstanding shares (Data source: Thomson-Reuters 13f filing) |
Insider Ownership | The aggregate percentage ownership of common stocks held by top five executives (officers and directors) (Data source: ExecuComp) |
CEO Wealth Sensitivity | Dollar change in CEO wealth for a 100 percentage point change in firm value, divided by annual flow compensation from (Data Source: Alex Edmans (https://alexedmans.com/data/ (accessed on 16 Jan 2023).) |
Board size | Number of directors on the board (Data source: BoardEx) |
CEO duality | Indicator variable that equals one if the CEO is the chairman of the board and zero otherwise (Data source: BoardEx) |
CEO age | Age of the CEO (Data source: ExecuComp) |
CEO gender | Indicator variable equals one for the male CEO and zero otherwise (Data source: ExecuComp) |
CEO tenure | Number of years that the CEO has been serving in the current position (Data source: ExecuComp) |
Excess cash | Ratio of the residuals from regressing cash holdings on assets, NWC, cash flow, cash flow volatility, market-to-book, capital expenditures, acquisition expenditures, leverage, RD, dividend, year fixed effects, and firm fixed effects to sales as in Dittmar and Mahrt-Smith (2007) (Data source: ExecuComp) |
PP&E | Ratio of net property, plant, and equipment (PPENT) to net assets (AT − CHE) |
→ PPENT/(AT-CHE) (Data source: Compustat) | |
∆ Capital expenditures | Change in capital expenditures (∆CAPX) scaled by lagged net assets ((AT-CHE)t-1) |
→ ∆CAPX/(AT-CHE)t-1 (Data source: Compustat) | |
Investment | Yearly growth in property, plant, and equipment (∆PPENT/PPENTt-1) plus yearly growth in inventory (∆INVT/INVTt-1) plus R&D spending (XRD), all scaled by the lagged book value of total assets (ATt-1) |
→ (∆PPENT/PPENTt-1 + ∆INVT/INVTt-1 + XRD)/ATt-1 (Data source: Compustat) | |
Q | Market value of equity (CSHO*PRCC_F) minus the book value of equity (SEQ) plus the book value of total assets (AT), all scaled by the book value of total assets (AT) |
→ ((CSHO*PRCC_F)-SEQ + AT)/AT (Data source: Compustat) | |
CF | Net income before extraordinary items (IB) plus depreciation and amortization (DP) plus R&D expenses (XRD), all scaled by the lagged book value of total assets (ATt-1) |
→ (IB + DP + XRD)/ATt-1 (Data source: Compustat) |
1 | Economic theory suggests the following conditions for the occurrence of moral hazard problems (Mirrlees 1999). First, information among parties is uneven. Second, actions are hidden, but outcomes are visible. Third, contracts can be outcome-based. Fourth, without commitment to unseen actions, social norms do not guide party behavior. Under these conditions, the behavior of the transaction parties, constrained by these limitations, can at best achieve outcomes that are second-best, reflecting inefficiencies inherent in the situation (Holmström 1979; Mirrlees 1999). These conditions closely mirror the situation that CEOs often find themselves in, highlighting the prevalence of moral hazard in corporate governance. Hart and Holmström (1987) propose a contract-theoretic principal–agent model based on moral hazard. Similar to Mirrlees (1999), they assume a stochastic relationship between unobservable effort and observable outcomes, with the agent choosing an unobservable effort level. In this model, in fairly general situations, the agent often receives a strictly positive rent, and the principal incurs agency costs. |
2 | Managerial self-indulgent activities related to the misuse of corporate cash can include pursuing unnecessary and value-decreasing growth to boost their own benefits, acquiring unrelated businesses, granting generous stock options and other forms of compensation to CEOs, and entrenching themselves through the implementation of anti-takeover provisions (Shleifer and Vishny 1997). |
3 | Another vital theory related to corporate cash holdings is the pecking order theory (Myers and Majluf 1984). This theory suggests a significant information asymmetry between a firm and outside investors, making external financing costly. Consequently, a firm is incentivized to maintain sufficient retained earnings to obviate the need for external financing when lucrative investment opportunities arise, thus encouraging cash holdings. Although this theory is pivotal, it is not pertinent to the motivation of this paper, which aims to examine the relationship between CEO-friendly boards and corporate cash holdings. |
4 | The existing literature on CEO-friendly boards is extensive. Previous studies on CEO-friendly boards have reported that the presence of CEO-friendly boards improves firm value by producing more patents (Kang et al. 2018) and yielding higher bidder announcement returns when advising needs are high (Schmidt 2015). On the other hand, the presence of CEO-friendly boards can deteriorate firm value by reducing SEO announcement returns (Bhuyan et al. 2022) and diminishing labor market efficiency (Khedmati et al. 2020). |
5 | The underlying principle of this hypothesis is that the CEO encounters a trade-off in disclosing information to directors: The CEO sharing more information with directors can enhance the quality of the directors’ advice. However, simultaneously, increased information sharing enables directors to monitor the CEO more closely. This trade-off intensifies when directors are stringent towards the CEO. Conversely, CEO-friendly directors can mitigate this trade-off, thereby facilitating information exchange between the CEO and the directors (Adams and Ferreira 2007). |
6 | We thank Alex Edmans for generously sharing the data with us. |
References
- Acharya, Viral, Sergei Davydenko, and Ilya Strebulaev. 2012. Cash holdings and credit risk. Review of Financial Studies 25: 3572–609. [Google Scholar] [CrossRef]
- Adams, Renee, and Daniel Ferreira. 2007. A theory of friendly boards. Journal of Finance 62: 217–50. [Google Scholar] [CrossRef]
- Adams, Renee, Benjamin Hermalin, and Michael Weisbach. 2010. The role of boards of directors in corporate governance: A conceptual framework and survey. Journal of Economic Literature 48: 58–107. [Google Scholar] [CrossRef]
- Baker, Malcolm, Jeremy Stein, and Jeffrey Wurgler. 2003. When does the market matter? Stock prices and the investment of equity-dependent firms. Quarterly Journal of Economics 118: 969–1005. [Google Scholar] [CrossRef]
- Bates, Thomas, Kathleen Kahle, and Rene Stulz. 2009. Why do US firms hold so much more cash than they used to? Journal of Finance 64: 1985–2021. [Google Scholar] [CrossRef]
- Bhuyan, Md Nazmul Hasan, Meena Subedi, and Maimuna Akter. 2022. CEO-friendly boards and seasoned equity offerings. Journal of Behavioral and Experimental Finance 36: 100761. [Google Scholar] [CrossRef]
- Bruynseels, Liesbeth, and Eddy Cardinaels. 2014. The audit committee: Management watchdog or personal friend of the CEO? The Accounting Review 89: 113–45. [Google Scholar] [CrossRef]
- Cai, Jie, Yixin Liu, Yiming Qian, and Miaomiao Yu. 2015. Information asymmetry and corporate governance. Quarterly Journal of Finance 5: 1550014. [Google Scholar] [CrossRef]
- Cao, Ying, Dan Dhaliwal, and Zengquan Li. 2015. Are all independent directors equally informed? Evidence based on their trading returns and social networks. Management Science 61: 795–813. [Google Scholar] [CrossRef]
- Chen, Yenn-ru, Keng-Yu Ho, and Chia-Wei Yeh. 2020. CEO overconfidence and corporate cash holdings. Journal of Corporate Finance 62: 101577. [Google Scholar] [CrossRef]
- Cheung, Adrian. 2016. Corporate social responsibility and corporate cash holdings. Journal of Corporate Finance 37: 412–430. [Google Scholar] [CrossRef]
- Cohen, Lauren, Andrea Frazzini, and Christopher Malloy. 2008. The small world of investing: Board connections and mutual fund returns. Journal of Political Economy 116: 951–79. [Google Scholar] [CrossRef]
- Dittmar, Amy, and Jan Mahrt-Smith. 2007. Corporate governance and the value of cash holdings. Journal of Financial Economics 83: 599–634. [Google Scholar] [CrossRef]
- Duchin, Ran. 2010. Cash holdings and corporate diversification. Journal of Finance 65: 955–92. [Google Scholar] [CrossRef]
- Duchin, Ran, and Denis Sosyura. 2013. Divisional managers and internal capital markets. Journal of Finance 68: 387–429. [Google Scholar] [CrossRef]
- Faulkender, Michael, and Rong Wang. 2006. Corporate financial policy and the value of cash. Journal of Finance 2006: 1957–90. [Google Scholar] [CrossRef]
- Fazzari, Steven, Glenn Hubbard, and Bruce Petersen. 1988. Financing constraints and corporate investment. Brookings Papers on Economics Activity 1: 141–206. [Google Scholar] [CrossRef]
- Ferreira, Miguel, and Antonio Vilela. 2004. Why do firms hold cash? Evidence from EMU countries. European Financial Management 10: 295–319. [Google Scholar] [CrossRef]
- Fracassi, Cesare, and Geoffrey Tate. 2012. External networking and internal firm governance. Journal of Finance 67: 153–94. [Google Scholar] [CrossRef]
- Han, Seungjin, and Jiaping Qiu. 2007. Corporate precautionary cash holdings. Journal of Corporate Finance 13: 43–57. [Google Scholar] [CrossRef]
- Harford, Klasa, Sandy Klasa, and William F. Maxwell. 2014. Refinancing risk and cash holdings. Journal of Finance 69: 975–1012. [Google Scholar] [CrossRef]
- Harris, Milton, and Artur Raviv. 2008. A theory of board control and size. Review of Financial Studies 21: 1797–832. [Google Scholar] [CrossRef]
- Hart, Oliver, and Bengt Holmström. 1987. The theory of contracts. In Advances in Economic Theory. Cambridge: Cambridge University Press. [Google Scholar]
- Holmström, Bengt. 1979. Moral hazard and observability. Bell Journal of Economics 10: 74–91. [Google Scholar] [CrossRef]
- Hsu, Wen-Yen, Yenyu Huang, and Gene Lai. 2015. Corporate Governance and cash holdings: Evidence From the U.S. property–liability insurance industry. Journal of Risk & Insurance 82: 715–48. [Google Scholar]
- Jensen, Michael. 1986. Agency cost of free cash flow, corporate finance, and takeovers. American Economic Review 76: 323–29. [Google Scholar]
- Jensen, Michael, and William Meckling. 1976. Theory of the firm. Managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3: 305–60. [Google Scholar] [CrossRef]
- Kalcheva, Ivalina, and Karl Lins. 2007. International evidence on cash holdings and expected managerial agency problems. Review of Financial Studies 20: 1087–112. [Google Scholar] [CrossRef]
- Kang, Jun-Koo, Wei-Lin Liu, Angie Low, and Le Zhang. 2018. Friendly boards and innovations. Journal of Empirical Finance 45: 1–25. [Google Scholar] [CrossRef]
- Khedmati, Mehdi, Mohammed Aminu Sualihu, and Alfred Yawson. 2020. CEO-director ties and labor investment efficiency. Journal of Corporate Finance 65: 101492. [Google Scholar] [CrossRef]
- Lang, Larry, Eli Ofek, and Rene Stulz. 1996. Leverage, investment, and firm growth. Journal of Financial Economics 40: 3–29. [Google Scholar]
- Lang, Larry, Rene Stulz, and Ralph Walkling. 1991. A test of the free cash flow hypothesis: The case of bidder returns. Journal of Financial Economics 29: 315–35. [Google Scholar] [CrossRef]
- Mirrlees, James. 1999. The theory of moral hazard and unobservable behavior: Part I. Review of Economics Studies 66: 3–21. [Google Scholar] [CrossRef]
- Marwick, Alex, Mostafa Hasan, and Tianpei Luo. 2020. Organization capital and corporate cash holdings. International Review of Financial Analysis 68: 101458. [Google Scholar] [CrossRef]
- Myers, Stewart, and Nicholas Majluf. 1984. Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics 13: 187–221. [Google Scholar] [CrossRef]
- Opler, Tim, Lee Pinkowitz, Rene Stulz, and Rohan Williamson. 1999. The determinants and implications of corporate cash holdings. Journal of Financial Economics 52: 3–46. [Google Scholar] [CrossRef]
- Pinkowitz, Lee, Rene Stulz, and Rohan Williamson. 2006. Does the contribution of corporate cash holdings and dividends to firm value depend on governance? A cross-country analysis. Journal of Finance 61: 2725–51. [Google Scholar] [CrossRef]
- Raheja, Charu. 2005. Determinants of board size and composition: A theory of corporate boards. Journal of Financial and Quantitative Analysis 40: 283–306. [Google Scholar] [CrossRef]
- Saunders, Anthony, Marcia Cornett, and Otgo Erhemjamts. 2021. Financial Institutions Management: A Risk Management Approach, 10th ed. New York: McGraw Hill. [Google Scholar]
- Schmidt, Breno. 2015. Costs and benefits of friendly boards during mergers and acquisitions. Journal of Financial Economics 117: 424–47. [Google Scholar] [CrossRef]
- Shleifer, Andrei, and Robert Vishny. 1997. A survey of corporate governance. Journal of Finance 52: 737–83. [Google Scholar] [CrossRef]
- Tirole, Jean. 2006. The Theory of Corporate Finance. Princeton: Princeton University Press. [Google Scholar]
Firms with Friendly Board | Firms with No Friendly Board | |||
---|---|---|---|---|
(N = 7,774) | (N = 13,697) | |||
Mean | Median | Mean | Median | |
Firm characteristic: | ||||
Cash/Sales | 0.239 | 0.095 | 0.331 *** | 0.139 *** |
Assets | 12.741 | 3.093 | 3.695 *** | 1.046 *** |
PP&E | 0.311 | 0.238 | 0.275 *** | 0.202 *** |
Excess cash | 0.000 | 0.000 | 0.000 | 0.000 |
Market-to-book | 2.562 | 1.803 | 2.961 *** | 1.858 *** |
Capital expenditures | 0.0586 | 0.041 | 0.058 | 0.039 *** |
Investment | 0.031 | 0.006 | 0.044 *** | 0.010 *** |
Q | 2.099 | 1.702 | 2.199 *** | 1.710 ** |
CF | 0.138 | 0.124 | 0.137 | 0.127 *** |
Institutional ownership | 22.237 | 20.935 | 24.586 *** | 24.586 *** |
Insider ownership | 2.598 | 0.360 | 3.465 *** | 0.731 *** |
Board and CEO characteristics: | ||||
Board size | 12.345 | 13.000 | 10.126 *** | 10.000 *** |
CEO duality | 0.635 | 0.424 *** | ||
CEO age | 56.411 | 56.000 | 55.537 *** | 55.000 *** |
CEO gender | 0.956 | 0.974 *** | ||
CEO tenure | 8.668 | 6.252 | 7.842 *** | 5.586 *** |
CEO wealth sensitivity | 525.289 | 6.515 | 84.375 ** | 5.430 *** |
Dependent Variable: Cash | (1) | (2) |
---|---|---|
Friendly board | −0.047 ** | −0.058 *** |
(−2.14) | (−2.57) | |
Assets | −0.006 *** | −0.006 *** |
(−4.96) | (−4.27) | |
NWC | −0.596 *** | −0.588 *** |
(−8.04) | (−7.80) | |
Cash flow | 0.209 *** | 0.243 *** |
(2.93) | (3.32) | |
Cash flow volatility | 0.002 | 0.002 |
(1.03) | (1.12) | |
Market-to-book | 0.066 *** | 0.063 *** |
(14.89) | (13.94) | |
Capital expenditures | −0.397 * | −0.479 ** |
(−1.84) | (−2.14) | |
Acquisitions expenditures | −0.622 *** | −0.604 *** |
(−6.86) | (−6.53) | |
Leverage | 0.224 *** | 0.243 *** |
(4.74) | (5.00) | |
RD | 1.495 *** | 1.570 *** |
(9.98) | (10.09) | |
Dividend | −0.049 * | −0.068 ** |
(−1.79) | (−2.42) | |
Institutional ownership | 0.001 | 0.001 |
(1.17) | (1.02) | |
Insider ownership | 0.001 | 0.002 |
(0.74) | (0.95) | |
CEO wealth sensitivity | 0.000 | 0.000 |
(0.65) | (0.61) | |
Board size | −0.012 *** | |
(−2.77) | ||
CEO duality | −0.009 | |
(−0.41) | ||
CEO age | −0.002 | |
(−1.13) | ||
CEO gender | −0.100 * | |
(−1.68) | ||
CEO tenure | 0.000 | |
(−0.06) | ||
Year and firm fixed effects | Yes | Yes |
N | 14,320 | 13,542 |
Adjusted R2 | 77.42% | 77.79% |
Dependent Variable: Market-to-Book | (1) | (2) |
---|---|---|
Excess cash | −57.443 *** | −66.265 *** |
(−6.95) | (−7.73) | |
Excess cash x Friendly board | 35.115 ** | 48.346 *** |
(1.94) | (2.59) | |
Friendly board | −0.048 | −0.057 |
(−1.08) | (−1.22) | |
Assets | −0.038 *** | −0.039 *** |
(−14.51) | (−14.17) | |
PP&E | 2.407 *** | 2.302 *** |
(11.40) | (10.65) | |
Cash flow | 1.588 *** | 1.757 *** |
(12.69) | (13.65) | |
Institutional ownership | −0.012 *** | −0.011 *** |
(−9.26) | (−8.86) | |
Insider ownership | −0.007 ** | −0.006 |
(−2.00) | (−1.58) | |
CEO wealth sensitivity | 0.000 ** | 0.000 ** |
(−2.35) | (−2.43) | |
Board size | −0.022 ** | |
(−2.40) | ||
CEO duality | 0.062 | |
(1.37) | ||
CEO age | −0.011 *** | |
(−3.03) | ||
CEO gender | −0.150 | |
(−1.22) | ||
CEO tenure | 0.008 ** | |
(2.01) | ||
Year and firm fixed effects | Yes | Yes |
N | 14,320 | 13,542 |
Adjusted R2 | 64.92% | 65.58% |
Dependent Variable: Market-to-Book | (1) | (2) |
---|---|---|
Lagged excess cash | −58.025 *** | −74.329 *** |
(−2.81) | (−3.50) | |
Lagged excess cash x Lagged friendly board | 154.500 *** | 170.638 *** |
(4.21) | (4.59) | |
Lagged friendly board | −0.062 | −0.043 |
(−0.78) | (−0.51) | |
Lagged market-to-book | 0.545 *** | 0.537 *** |
(31.16) | (28.97) | |
Assets | −0.014 *** | −0.014 *** |
(−3.06) | (−2.83) | |
PP&E | 1.272 *** | 1.120 *** |
(3.51) | (2.97) | |
Institutional ownership | −0.010 *** | −0.011 *** |
(−4.98) | (−4.92) | |
Insider ownership | −0.008 | −0.007 |
(−1.36) | (−1.08) | |
CEO wealth sensitivity | 0.000 | 0.000 ** |
(1.53) | (2.05) | |
Board size | −0.025 * | |
(−1.62) | ||
CEO duality | 0.057 | |
(0.76) | ||
CEO age | −0.009 | |
(−1.48) | ||
CEO gender | −0.192 | |
(−0.92) | ||
CEO tenure | 0.006 | |
(0.95) | ||
Year and firm fixed effects | Yes | Yes |
N | 4521 | 4271 |
Adjusted R2 | 74.81% | 74.22% |
Dependent Variable: Market-to-Book | (1) | (2) |
---|---|---|
∆Capital expenditures | −1.003 ** | −0.820 * |
(−2.20) | (−1.72) | |
∆Capital expenditures x Lagged friendly board | 2.372 *** | 2.062 *** |
(2.91) | (2.48) | |
Lagged friendly board | −0.122 ** | −0.114 * |
(−2.03) | (−1.83) | |
Lagged market-to-book | 0.483 *** | 0.463 *** |
(48.84) | (44.96) | |
Assets | −0.023 *** | −0.023 *** |
(−7.75) | (−7.45) | |
PP&E | 1.565 *** | 1.656 *** |
(5.46) | (5.68) | |
Institutional ownership | −0.013 *** | −0.013 *** |
(−8.00) | (−7.61) | |
Insider ownership | −0.003 | −0.006 |
(−0.75) | (−1.28) | |
CEO wealth sensitivity | 0.000 | 0.000 |
(−0.59) | (−0.76) | |
Board size | −0.019 * | |
(−1.63) | ||
CEO duality | −0.012 | |
(−0.21) | ||
CEO age | 0.001 | |
(0.15) | ||
CEO gender | −0.093 | |
(−0.58) | ||
CEO tenure | 0.007 | |
(1.52) | ||
Year and firm fixed effects | Yes | Yes |
N | 8452 | 8028 |
Adjusted R2 | 74.37% | 74.39% |
Dependent Variable: Investment | (1) | (2) |
---|---|---|
Lagged Q x Lagged friendly board | 0.002 *** | 0.003 *** |
(5.00) | (7.54) | |
Lagged CF x Lagged friendly board | −0.004 | −0.007 |
(−0.91) | (−1.38) | |
Lagged friendly board | −0.004 *** | −0.006 *** |
(−3.66) | (−5.66) | |
Lagged Q | 0.004 *** | 0.004 *** |
(15.49) | (12.64) | |
Lagged CF | 0.008 *** | 0.019 *** |
(2.99) | (6.62) | |
Lagged institutional ownership | 0.000 *** | |
(4.65) | ||
Lagged insider ownership | 0.000 ** | |
(2.43) | ||
Lagged CEO wealth sensitivity | 0.000 *** | |
(−4.60) | ||
Year and firm fixed effects | Yes | Yes |
N | 16,053 | 14,274 |
Adjusted R2 | 86.75% | 87.29% |
Disclaimer/Publisher’s Note: The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of MDPI and/or the editor(s). MDPI and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content. |
© 2024 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).
Share and Cite
Seo, H.; Yi, S.; Yang, Q.; McCumber, W. The Relation between CEO-Friendly Boards and the Value of Cash Holdings. J. Risk Financial Manag. 2024, 17, 113. https://doi.org/10.3390/jrfm17030113
Seo H, Yi S, Yang Q, McCumber W. The Relation between CEO-Friendly Boards and the Value of Cash Holdings. Journal of Risk and Financial Management. 2024; 17(3):113. https://doi.org/10.3390/jrfm17030113
Chicago/Turabian StyleSeo, Hoontaek, Sangho Yi, Qing Yang, and William McCumber. 2024. "The Relation between CEO-Friendly Boards and the Value of Cash Holdings" Journal of Risk and Financial Management 17, no. 3: 113. https://doi.org/10.3390/jrfm17030113