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Corporate Excess Cash Holdings and Firm Value under Governance Consideration

최승두|이장우
한국금융공학회 (Korean Association of Financial Engineering)|2012.03|金融工學硏究 (Korean Journal of Financial Engineering)|제11권 제1호|pp. 131-170|DOI 10.35527/kfedoi.2012.11.1.007

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참고문헌

키워드

재벌Governance지배구조DiversificationChaebol기업가치Firm ValueAgency Cost자본지출Free Cash Flow다각화Asian Financial CrisisCapital ExpendituresExcess Cash Holding초과현금보유여유현금흐름대리비용아시아금융위기
주제분류경영학

초록

We empirically examine the value information effect of excess cash holding by using agency and governance - related variables either individually or in combination. Our study extends the existing understanding of the market responses to the past, current, and future financial policies regarding excess cash holding and especially under the constraints of governance variables. Test results indicate that although current excess cash holding frequently hampers firm value, the past and future excess cash holding occasionally promote firm value. In addition, corporate policies related to the reduction of excess cash holding contribute to increasing the overall firm value. The effect of excess cash holding on firm values differs according to firm characteristics such as whether excess cash holding is positive or negative, or market conditions like the Asian financial crisis of 1997. Further, excess cash holdings react differently in determining firm value to different governance variables such as chaebol affiliation, ownership concentration and degree of diversification. This implies that the corporate governance structure significantly influences the manner in which excess cash holding affects firm value.

Abstract

We empirically examine the value information effect of excess cash holding by using agency and governance - related variables either individually or in combination. Our study extends the existing understanding of the market responses to the past, current, and future financial policies regarding excess cash holding and especially under the constraints of governance variables. Test results indicate that although current excess cash holding frequently hampers firm value, the past and future excess cash holding occasionally promote firm value. In addition, corporate policies related to the reduction of excess cash holding contribute to increasing the overall firm value. The effect of excess cash holding on firm values differs according to firm characteristics such as whether excess cash holding is positive or negative, or market conditions like the Asian financial crisis of 1997. Further, excess cash holdings react differently in determining firm value to different governance variables such as chaebol affiliation, ownership concentration and degree of diversification. This implies that the corporate governance structure significantly influences the manner in which excess cash holding affects firm value.

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