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Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms

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  • Wu MengYun
  • Um-e-Habiba
  • Muhammad Husnain
  • Bushra Sarwar
  • Waris Ali
  • Baogui Xin

Abstract

This study contributes to the literature by exploring the relationship between board financial expertise and cash holding policy and further showing how this relation is moderated by multiple large shareholders (MLS). This research is based on agency theory, resource dependence, trade-off, and pecking order theory to confirm how resourceful directors screen cash holding practices. This study selects the 100 listed family firms from the emerging economy of Pakistan for the period of 2006–2017. With the use of static (random and fixed effect estimator) and dynamic (GMM) estimation techniques, this study reveals that the financial expertise of the board members has a significant negative impact on the firms’ cash holding level. Further, moderating effect of MLS between board financial expertise and cash holding is significantly positive due to weak corporate governance mechanisms in family firms. Moreover, the research has implications for developing corporate governance mechanism and the management of liquid assets that corporate management might use for their benefits.

Suggested Citation

  • Wu MengYun & Um-e-Habiba & Muhammad Husnain & Bushra Sarwar & Waris Ali & Baogui Xin, 2021. "Board Financial Expertise and Corporate Cash Holdings: Moderating Role of Multiple Large Shareholders in Emerging Family Firms," Complexity, Hindawi, vol. 2021, pages 1-22, July.
    • Handle: RePEc:hin:complx:6397515
    DOI: 10.1155/2021/6397515
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    Cited by:

    1. Shahjahan Sarfraz Raja & Valliappan Raju & Muhammad Husnain & Sania Sarfraz & Fozia Malik & Shahnawaz Sarfraz Raja, 2022. "Framework for Sustainable Rural Development through Entrepreneurial Initiatives in Emerging Economies," Sustainability, MDPI, vol. 14(19), pages 1-32, September.

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