Title: Excess cash holdings and investment: the moderating roles of financial constraints and managerial entrenchment
Authors: Sheu, Her-Jiun
Lee, Shiou-Ying
Institute of Business and Management
Keywords: Excess cash;Financial constraints;Managerial entrenchment;Overinvestment;Underinvestment;G31;G34
Issue Date: 1-Oct-2012
Abstract: Our study investigates the relationship between excess cash holdings and investment behaviour under two dimensions of financial constraints and managerial entrenchment, based upon a sample of Taiwanese firms operating in an environment characterized by poor legal protection for investors, with data covering the years 20002006. We find that excess cash is significantly correlated with capital expenditure, particularly for firms financially constrained and with severe managerial entrenchment. However, the evidence shows that excess cash is insensitive to R&D expenditure under these two dimensions.
URI: http://dx.doi.org/10.1111/j.1467-629X.2012.00500.x
ISSN: 0810-5391
DOI: 10.1111/j.1467-629X.2012.00500.x
Volume: 52
Begin Page: 287
End Page: 310
Appears in Collections:Articles

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