Vol (16), Issue (1), 2023.

Effect of Corporate Governance on Cash Management in Family-Oriented Firms

Idrees Ali Shah, Muhammad Abdullah Khan Niazi, Muhammad Nouman,Muhammad Fahad Siddiqi.

The University of Agriculture Peshawar

This research shows the link of corporate governance (CG) with diverse facets of cash managementin family-oriented firms. Panel model is utilized for the year 2009 to 2021. The research depicts thatlevel of cash holding is negatively affected due to CG. The finding of the study is supported byflexibility hypothesis to protect their selves from external monitoring mangers hold more cash dueto agency conflict. The result further shows positive relationship of CG with "value of cash holding in family-oriented firms and has 0.192 extra marginal values for one rupee extra investment infamily-oriented firms under good governance compared to non-family-oriented firms. The researchfurther postulates that proper governance decreases spending of excess cash (ECash) on internalinvestment and corporate diversification in family-oriented firms. Alternatively, good-governedfamily-oriented firms increase spending of ECash on dividend compared to rival firms. ECash undergood governance positively affects performance indicates family-oriented firms having better CGuses ECash efficiently.
Keywords: Value of Cash Holding, Excess Cash, Corporate Governance, Family Firms.




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