State Ownership and Corporate Cash Holdings

2018/07/31 by Ruiyuan (Ryan) Chen, Ruiyuan Chen, Sadok El Ghoul +3 · 3 citations
Business, Management and Accounting · #Corporate Finance and Governance #Private Equity and Venture Capital #State Capitalism and Financial Governance

paper · doi:10.1017/s0022109018000236

Abstract

Using a unique sample of newly privatized firms from 59 countries, this article provides new evidence about the agency costs of state ownership and new insight into the corporate governance role of country-level institutions. Consistent with agency theory, we find strong and robust evidence that state ownership is positively related to corporate cash holdings. Moreover, we find that the strength of country-level institutions affects the relation between state ownership and the value of cash holdings. In particular, as state ownership increases, markets discount the value of cash holdings more in countries with weaker institutions.

Citations

• Resource-Constrained versus Demand-Constrained Systems
• Sample Selection Bias as a Specification Error
• Politically Connected Firms
• A Survey of Corporate Governance
• Law and Finance
• The Corporate Governance Role of the Media: Evidence from Russia

Cited by

• International evidence on state ownership and trade credit: Opportunities and motivations. [europepmc]
• State ownership, information asymmetry and cash holding: Impact of COVID-19 on Chinese-listed firms. [europepmc]
• Partial privatization and intellectual capital: The moderating role of firm internationalization and regional development. [europepmc]

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