Institutional ownership and cash holdings: evidence from Thailand

Name: Wiroj Phaiboonvessawat

LCSH: Burapha University.Business Administration

LCSH: Corporate governance

Abstract: This study aims to investigate whether and how institutional ownership, board governance mechanisms and firm characteristics influence cash holding policy among nonfinancial listed firms in Thailand from 2012 to 2016, employing both static and dynamic panel data analyses. The empirical result reveals that institutional ownership has a significant positive association with cash reserves, suggesting that firms with larger institutional ownership would have better corporate governance because these institutions can provide effective monitoring management. Consequently, shareholders have greater trust in their strong shareholder rights and firms have alleviated the agency problems of free cash flow so that shareholders are willing to allow managers to hold more cash reserves to meet operating needs and/or to take advantage of investment opportunities. In line with internal governance mechanisms, board size plays critical role in corporate cash policy, suggesting that firms with higher numbers of board members tend to hold a lower amount of cash reserves. In the aspect of firm characteristics, firms with higher leverage tend to hold less cash stockpiles, and there is a non-linear impact of leverage on firms’ cash holding decisions; furthermore, firms with larger liquid assets and larger capital expenditures tend to hoard smaller stockpiles of cash. In contrast, firms with greater operating cash flow are more likely to hold more cash reserves. Our findings suggest that external governance mechanisms such as institutional ownership have a greater impact on Thai firms' cash holding decisions; indeed, regulators should revise and reform the regulatory framework for institutional investors to promote long-term investments. Additionally, policy makers could provide guidelines and help firms have more attractiveness and promote institutional investors to buy and hold more Thai stocks for long-term investment. In consequence, firms with long-term institutional investors would have a more effective institutional monitoring role and could improve the quality of governance practices, whereby the rights of shareholders are better protected in the Thai stock market for sustainable economic growth in the long-run.

Burapha University. Library

Address: CHONBURI

Email: buulibrary@buu.ac.th

Name: Yordying Thanatawee

Role: Principal advisor

Created: 2019

Modified: 2021-02-16

Issued: 2021-02-16

วิทยานิพนธ์/Thesis

application/pdf

CallNumber: Th 658.4 Wi798I

eng

DegreeName: Doctor of Business Administration

Level: Doctoral Degree

Descipline: Business Administration

Grantor: Burapha University

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