Impact of board attributes and managerial ownership on cash holdings: empirical evidence using GMM and quantile regressions

Abstract

Purpose

The purpose of this study is to examine the impact of board attributes and managerial ownership on cash holdings.

Design/methodology/approach

The present study examines a sample of 70 listed firms in Saudi Arabia observed during the period stretching from 2006 to 2016. To test the hypotheses, the authors used generalized method of moments and quantile regressions.

Findings

The empirical results reveal that corporate governance (CG) mechanisms are inefficient in the Saudi context. In fact, the authors found that board size, board independence, duality and managerial ownership impact positively and significantly cash holdings. Additionally, quantile regressions confirm the results that at certain thresholds, CG mechanisms are not efficient in protecting shareholders’ interests. Shariah compliance is found to moderate negatively and significantly the studied relationship.

Originality/value

This study helps to not only clarify and help decision-makers to see the importance of corporate cash management but also to identify the limits of the CG mechanisms put in place.

Citation

Talbi, D. and Menchaoui, I. (2023), "Impact of board attributes and managerial ownership on cash holdings: empirical evidence using GMM and quantile regressions", Corporate Governance, Vol. 23 No. 4, pp. 723-741. https://doi.org/10.1108/CG-04-2021-0145