Corporate Governance and Firm Cash Holdings

  title={Corporate Governance and Firm Cash Holdings},
  author={Jarrad Harford and Sattar Mansi and W. Maxwell},
  • Jarrad Harford, Sattar Mansi, W. Maxwell
  • Published 2006
  • Business
  • We examine the relation between the management of cash holdings and corporate governance. We find that firms with weaker corporate governance have smaller cash reserves. Further tests suggest that these firms dissipate their cash reserves more quickly than do managers of firms with stronger governance, and that rather than investing internally, they spend the cash primarily on acquisitions. The investment of cash by weakly governed managers reduces future profitability, an effect that is priced… CONTINUE READING
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