Managerial Ownership and Corporate Cash Holdings: Insights from an Emerging Market

Business and Economics Research Journal, 2016

Posted: 8 Jun 2019

See all articles by Nida Abdioglu

Nida Abdioglu

Bandirma Onyedi Eylul University/ Faculty of Economics and Administrative Sciences

Date Written: 2016

Abstract

This paper examines the impact of managerial ownership on cash holding decisions of the firms listed in Borsa Istanbul 100 index between 2005 and 2013. Main aim of the study is to analyse whether there is any evidence for managerial alignment or managerial entrenchment effect on the corporate cash holdings. A non-monotonic relation between managerial ownership and cash holding is found. The findings indicate that managerial ownership aligns the interests of managers with those of shareholders. These firms with managerial ownership prefer to hold less cash. In addition, it is reported that at higher level of managerial ownership, entrenchment effect of managers is seen. Managers practice their own interests at the expense of shareholders’ and the firms with higher level of managerial ownership hold more cash. The results also reveal that prior year’s cash holding positively affects this year’s cash holding. Firm size, liquidity and tangibility are also effective on cash holding decisions of Turkish firms.

Keywords: Cash Holdings, Managerial Ownership, Panel Data, Managerial Alignment, Managerial Entrenchment

JEL Classification: G30, G32, G34

Suggested Citation

Abdioglu, Nida, Managerial Ownership and Corporate Cash Holdings: Insights from an Emerging Market (2016). Business and Economics Research Journal, 2016 , Available at SSRN: https://ssrn.com/abstract=3392362

Nida Abdioglu (Contact Author)

Bandirma Onyedi Eylul University/ Faculty of Economics and Administrative Sciences ( email )

Balikesir, 10200
Turkey

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
207
PlumX Metrics