Open AccessExamining The Excess Cash Holdings As An Indicator of Agency Problems
Author(s) -
Ernie Hendrawaty
Publication year - 2020
Publication title -
international business and accounting research journal
Language(s) - English
Resource type - Journals
eISSN - 2550-0368
pISSN - 2549-0303
DOI - 10.15294/ibarj.v4i2.125
Subject(s) - cash , agency (philosophy) , operating cash flow , business , sample (material) , panel data , cash management , principal–agent problem , cash flow statement , monetary economics , cash flow forecasting , agency cost , value (mathematics) , enterprise value , cash conversion cycle , finance , economics , econometrics , corporate governance , statistics , shareholder , mathematics , philosophy , chemistry , epistemology , chromatography
This research aims to examine the implications of excess cash holdings on firm value based on agency theory. Data were obtained from a total sample of 1828 non-financial public companies in Indonesia, with 672 exceeding normal cash holdings using the panel regression techniques. The result showed that excess cash holdings have a negative effect on the firm value which is stronger for more concentrated ownership, for more dispersed ownership and for more financially difficult firms. Overall the empirical finding showed that excess cash holdings acts as a significant indicator of agency problems.