International Journal of Financial Management

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Impact of Corporate Governance on the Cash Holding of the Firms:An Empirical Study of Indian Manufacturing Sector


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1 Haryana School of Business, Guru Jambheshwar University of Science & Technology, Hisar, Haryana, India
     

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The paper empirically examines the impact of corporate governance on the cash holding of the firms. The components of corporate governance are measured by board size, board meeting, audit committee members, director's remuneration and non executive directors and the cash holding is measured with the log of average cash and size is taken as control variable for the control effect on the dependent variables. Moreover, correlation and panel regression model were employed to examine the relationship between the corporate governance and cash holding. Empirical data was collected from 96 firms over the period of 2004-05 to 2013-14. The results show that directors' remuneration and the number of audit committee members positively influence the cash holding and the board size also positively influences the cash holding whereas, the non executive directors and the board meetings do not play any role in enhancing the cash holding.

Keywords

Corporate Governance, Cash Holding, India, Manufacturing Sector, Board Size.
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  • Impact of Corporate Governance on the Cash Holding of the Firms:An Empirical Study of Indian Manufacturing Sector

Abstract Views: 378  |  PDF Views: 2

Authors

Karam Pal Narwal
Haryana School of Business, Guru Jambheshwar University of Science & Technology, Hisar, Haryana, India
Sonia Jindal
Haryana School of Business, Guru Jambheshwar University of Science & Technology, Hisar, Haryana, India

Abstract


The paper empirically examines the impact of corporate governance on the cash holding of the firms. The components of corporate governance are measured by board size, board meeting, audit committee members, director's remuneration and non executive directors and the cash holding is measured with the log of average cash and size is taken as control variable for the control effect on the dependent variables. Moreover, correlation and panel regression model were employed to examine the relationship between the corporate governance and cash holding. Empirical data was collected from 96 firms over the period of 2004-05 to 2013-14. The results show that directors' remuneration and the number of audit committee members positively influence the cash holding and the board size also positively influences the cash holding whereas, the non executive directors and the board meetings do not play any role in enhancing the cash holding.

Keywords


Corporate Governance, Cash Holding, India, Manufacturing Sector, Board Size.

References