Reference : Corporate Ownership Structure and the Cash Flow Sensitivity of Cash
Scientific congresses, symposiums and conference proceedings : Unpublished conference
Business & economic sciences : Finance
Corporate Ownership Structure and the Cash Flow Sensitivity of Cash
Derouiche, Imen mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Saffar, Walid [The Hong Kong Polytechnic University]
Boubaker, Sabri [Champagne School of Business, ESC Troyes, France]
International Finance Conference – IFC 9
10-11 March 2017
[en] Ownership structure; Excess control rights; ; Multiple large shareholders; ; Cash flow sensitivity of cash
[en] This article examines the effects of excess control rights of the controlling shareholder and the presence of multiple large shareholders on financial constraints, proxied by cash flow sensitivity of cash. Using a unique data set of 745 French listed firms during 1998—2013, the results show that firms have high cash flow sensitivity of cash when the controlling shareholder’s control rights exceed its cash-flow ownership. This sensitivity decreases, however, with the contestability of the controlling owner’s power. Taken together, these findings provide empirical support to the argument that firms experiencing excess control rights face considerable financial constraints that are lowered in the presence of high control contestability.
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