Creditor rights, country governance, and corporate cash holdings

Bruce Seifert, Halit Gonenc

Research output: Contribution to journalArticleAcademicpeer-review

31 Citations (Scopus)
221 Downloads (Pure)

Abstract

This study examines the impact of creditor rights and country governance on cash holdings using a sample of firms from 47 countries. We hypothesize that cash holdings are smaller when both creditor rights and country governance are high. In these circumstances firms will not need to hold as much cash for future investments needs (precautionary funds) because firms will expect that funds will be available in the future. Our findings support our hypothesis and hold for alternative definitions for cash holdings, different country samples, different definitions of governance and concerns about endogeneity.
Original languageEnglish
Pages (from-to)65-90
Number of pages26
JournalJournal of International Financial Management and Accounting
Volume27
Issue number1
DOIs
Publication statusPublished - Feb-2016

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