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Social and Environmental Contributions, Board Size and Cash Holding: The Case of Energy Firms

Author

Listed:
  • Nguyen Thanh Liem

    (University of Economics and Law, Ho Chi Minh City, Vietnam,)

  • Nguyen Vinh Khuong

    (University of Economics and Law, Ho Chi Minh City, Vietnam,)

  • Phung Anh Thu

    (Faculty of Finance and Accounting, Nguyen Tat Thanh University, Ho Chi Minh City, Vietnam.)

Abstract

The level of cash holding has important impact on firm operations, which maintains the desire to study the determinants of cash holding to the benefits of the firm. This study seeks to examine the individual effect of corporate social responsibility (CSR), i.e. activities to protect environmental, social, customer and labor well-being, and board size on cash holding, as well as their interaction on this factor for a sample of listed energy firms in Vietnam. Our results show that CSR and board size both negatively affect cash holdings, implying that these two factors act as effective mechanisms to curtail excessive cash holding, which may harm firm performance as suggested under agency theory. An interesting finding from our research is that if both CSR and board size are negatively related to cash holdings, the interaction of these two factors is positively related to cash holdings. An implication from this finding is that firms with proper governance characteristics could pay less attention to agency cost and information asymmetry, and in fact show more concern about precautionary motives when it comes to cash holding decisions.

Suggested Citation

  • Nguyen Thanh Liem & Nguyen Vinh Khuong & Phung Anh Thu, 2020. "Social and Environmental Contributions, Board Size and Cash Holding: The Case of Energy Firms," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 17-22.
    • Handle: RePEc:eco:journ2:2020-04-3
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    References listed on IDEAS

    as
    1. Acharya, Viral V. & Almeida, Heitor & Campello, Murillo, 2007. "Is cash negative debt? A hedging perspective on corporate financial policies," Journal of Financial Intermediation, Elsevier, vol. 16(4), pages 515-554, October.
    2. Berger, Philip G & Ofek, Eli & Yermack, David L, 1997. "Managerial Entrenchment and Capital Structure Decisions," Journal of Finance, American Finance Association, vol. 52(4), pages 1411-1438, September.
    3. repec:bla:jfinan:v:59:y:2004:i:4:p:1777-1804 is not listed on IDEAS
    4. Al-Najjar, Basil & Clark, Ephraim, 2017. "Corporate governance and cash holdings in MENA: Evidence from internal and external governance practices," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 1-12.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Ines Ben Jazia & Maali Kachouri, 2024. "Board Size as a Mediator in the Relationship Between Corporate Social Responsibility and Audit Quality: Insights from Europe," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 91-112.

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    More about this item

    Keywords

    Corporate Social Responsibility; Board Size; Cash Holding; Interaction;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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