Do board characteristics moderate the relationship between political connections and cash holdings?: insight from Asian countries

Abdullah; Muhammad Arsalan Hashmi; Rayenda Khresna Brahmana; Humayun Fareeduddin

doi:10.1057/s41310-023-00218-z

Do board characteristics moderate the relationship between political connections and cash holdings? insight from Asian countries

Abdullah
, Muhammad Arsalan Hashmi
, Rayenda Khresna Brahmana
, Humayun Fareeduddin

Karachi Institute of Economics and Technology
Dow University of Health Sciences

Research output: Contribution to journal › Article › peer-review

Abstract

This study investigates the impact of board characteristics on the relationship between political connections and cash holdings in Asian countries. The findings suggest that Asian firms with political connections, large boards, and gender diversity have lower cash holdings, while firms with CEO duality have higher cash holdings. Further, the study provides unique evidence that Asian firms with large boards and gender diversity have a moderating effect and strengthen the negative influence of political connections on cash holdings. We also find that CEO duality moderates the influence of political connections on cash holdings in Asian countries. The authors conclude that strong board monitoring and governance mechanisms are crucial for the effective use of cash, particularly in firms with political connections. This research contributes to the literature by presenting novel evidence that board characteristics critically influence the relationship between political connections and cash holdings in the Asian context.

Original language	English
Pages (from-to)	624-641
Number of pages	18
Journal	International Journal of Disclosure and Governance
Volume	21
Issue number	4
DOIs	https://doi.org/10.1057/s41310-023-00218-z
Publication status	Published - 21 Dec 2023

Bibliographical note

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Keywords

Board gender diversity
Board size
Cash holdings
CEO duality
Political connections

ASJC Scopus subject areas

Business and International Management
Accounting
Finance
Economics and Econometrics
Strategy and Management

Access to Document

10.1057/s41310-023-00218-z

Cite this

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title = "Do board characteristics moderate the relationship between political connections and cash holdings?: insight from Asian countries",

abstract = "This study investigates the impact of board characteristics on the relationship between political connections and cash holdings in Asian countries. The findings suggest that Asian firms with political connections, large boards, and gender diversity have lower cash holdings, while firms with CEO duality have higher cash holdings. Further, the study provides unique evidence that Asian firms with large boards and gender diversity have a moderating effect and strengthen the negative influence of political connections on cash holdings. We also find that CEO duality moderates the influence of political connections on cash holdings in Asian countries. The authors conclude that strong board monitoring and governance mechanisms are crucial for the effective use of cash, particularly in firms with political connections. This research contributes to the literature by presenting novel evidence that board characteristics critically influence the relationship between political connections and cash holdings in the Asian context.",

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