Title: Firm cash holdings in emerging economics: does corporate governance matter?

Authors: Mark Odediyah; Kingsley Opoku Appiah; Rabiatu Kamil

Addresses: AIT Business School, Accra Institute of Technology, Accra, Ghana ' Department of Accounting and Finance, KNUST Business School, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana ' Department of Accounting Studies, Appiah-Menka University of Skills Training and Entrepreneurial Development, Kumasi, Ghana

Abstract: We investigate the role of corporate governance on cash holdings of listed firms in emerging economics. Specifically, we examine the link between institutional ownership, board independence and cash holdings. Based on a sample of 43 non-financial firms listed on the Ghana and Kenya Stock Exchanges, and using agency theory, we predict and find that board independence negatively affects cash holdings. Institutional ownership also exhibits a statistically insignificant negative relationship with cash holdings. Overall, our analyses show that independent directors, in emerging economies, enhance the board's ability to monitor managerial opportunism, thereby reducing cash holding levels.

Keywords: board of directors; liquidity; independent directors; institutional ownership; agency theory; Sub-Sahara Africa.

DOI: 10.1504/EMJM.2021.117803

EuroMed Journal of Management, 2021 Vol.4 No.1, pp.72 - 88

Received: 03 Apr 2021
Accepted: 15 Apr 2021
Published online: 24 Sep 2021 *

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