Reference : Geographic Location, Excess Control Rights, and Cash Holdings
Scientific journals : Article
Business & economic sciences : Accounting & auditing
Geographic Location, Excess Control Rights, and Cash Holdings
Derouiche, Imen mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Boubaker, Sabri [Champagne School of Management, Groupe ESC Troyes, France]
Meziane, Lasfer [Cass Business School, City University London]
International Review of Financial Analysis
Elsevier Science
Yes (verified by ORBilu)
[en] Geography; Firm location ; Excess control rights ; Cash holdings
[en] We assess the extent to which remotely-located firms are likely to discretionarily accumulate cash rather than distribute it to shareholders. We consider that these firms are less subject to shareholder scrutiny and, thus, will have high agency conflicts as the distance will facilitate the extraction of private benefits. Consistent with our predictions, we find a positive relation between the distance to the main metropolitan area and cash holdings, and this impact is more pronounced when the controlling shareholder has high levels of excess control rights (i.e., separation of cash-flow rights and control rights). Our results hold even after accounting for all control variables, including financial constraints, and suggest that geographic remoteness can be conducive to severe agency problems, particularly when there is a large separation of cash-flow rights and control rights.
Researchers ; Professionals ; Students ; General public ; Others

File(s) associated to this reference

Fulltext file(s):

Open access
Geographic Location, Excess Control, and Cash Holdings.pdfPublisher postprint492.18 kBView/Open

Bookmark and Share SFX Query

All documents in ORBilu are protected by a user license.