Cash Holdings and Employee Welfare

48 Pages Posted: 18 Apr 2015

See all articles by Mohamed Ghaly

Mohamed Ghaly

Lancaster University - Department of Accounting and Finance

Viet Anh Dang

Alliance Manchester Business School

Konstantinos Stathopoulos

The University of Manchester - Alliance Manchester Business School

Date Written: April 16, 2015

Abstract

This paper examines the relation between employee welfare practices and corporate cash holdings. We find firms that are strongly committed to employee well-being, measured by ratings on employee relations, to hold more cash. The effect of employee welfare standards on cash holdings is stronger for firms in human-capital-intensive, competitive, and high-labor-mobility industries in which employees are more important to their businesses. These results are consistent with the predictions of the stakeholder theory. Overall, our paper provides novel evidence on the role human capital and employee relations play in a firm’s cash management policy.

Keywords: Cash Holdings, Employee Welfare, Implicit Claims, Stakeholders, Human Capital.

JEL Classification: G32, G34, M54.

Suggested Citation

Ghaly, Mohamed and Dang, Viet Anh and Stathopoulos, Konstantinos, Cash Holdings and Employee Welfare (April 16, 2015). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2595124

Mohamed Ghaly (Contact Author)

Lancaster University - Department of Accounting and Finance ( email )

The Management School
Bailrigg
Lancaster, LA1 4YX
United Kingdom
+44 (0)1524 594526 (Phone)

Viet Anh Dang

Alliance Manchester Business School ( email )

AMBS Crawford House
Booth Street West
Manchester, Greater Manchester M15 6PB
United Kingdom
+44(0)16127 50438 (Phone)

Konstantinos Stathopoulos

The University of Manchester - Alliance Manchester Business School ( email )

AMBS Building
Booth Street West
Manchester, M15 6PB
United Kingdom
+44 161 275 6863 (Phone)
+44 161 275 4023 (Fax)

HOME PAGE: http://www.research.manchester.ac.uk/portal/K.Stathopoulos.html

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