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The bright side of CEO-board social ties: Evidence from French firms' cash holdings

Author

Listed:
  • Pascal Nguyen

    (Montpellier Research in Management - University of Montpellier)

  • Sadek Ouhadouch

    (Sciences and Humanities Confluence Research Center - UCLy, ESDES)

Abstract

We test the hypothesis that CEO-board social ties facilitate corporate financing. Our empirical approach is based on the precautionary motive for holding cash, which implies that firms hold more cash if they have more growth opportunities or if their cash flows are more volatile. Using a sample of French firms over the period 2006-2017, we show that firms with board-connected CEOs are less sensitive to these two factors, suggesting easier access to external finance. The results take into account the dynamic and endogenous nature of the relationship between board composition and cash holdings.

Suggested Citation

  • Pascal Nguyen & Sadek Ouhadouch, 2021. "The bright side of CEO-board social ties: Evidence from French firms' cash holdings," Economics Bulletin, AccessEcon, vol. 41(4), pages 2649-2656.
    • Handle: RePEc:ebl:ecbull:eb-21-00047
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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I4-P229.pdf
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    More about this item

    Keywords

    social networks; school ties; financing; cash holdings; endogeneity; panel data;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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