Excess Control Rights, Multiple Large Shareholders, and Corporate Cash Holding Behavior

Benkraiem, Ramzi; Boubaker, Sabri; Derouiche, Imen; Galariotis, Emilios

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Excess Control Rights, Multiple Large Shareholders, and Corporate Cash Holding Behavior

Benkraiem, Ramzi; Boubaker, Sabri; Derouiche, Imen et al.

2023 • In Finance

Peer reviewed

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Keywords :

Excess control rights; Corporate cash holding behavior; Multiple large shareholders

Abstract :

[en] This article examines the effects of excess control rights of the controlling shareholder and the presence of multiple large shareholders on the propensity of firms to save cash out of cash flow, i.e. the sensitivity of cash to cash flow. Using a data set covering 6,430 firm–year observations of 634 French listed firms, the evidence shows that firms have high cash flow sensitivity of cash when the controlling shareholder‘s control rights exceed its cash-flow ownership. However, this sensitivity decreases 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 save more cash out of cash flow due to their considerable financial constraints that are lowered in the presence of high control contestability.

Disciplines :

Finance

Author, co-author :

Benkraiem, Ramzi; Audencia Business School

Boubaker, Sabri; EM Normandie Business School, Métis Lab, France

Derouiche, Imen ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)

Galariotis, Emilios; Audencia Business School

External co-authors :

yes

Language :

English

Title :

Excess Control Rights, Multiple Large Shareholders, and Corporate Cash Holding Behavior

Publication date :

2023

Journal title :

Finance

ISSN :

0752-6180

eISSN :

2101-0145

Publisher :

Presses Universitaires de Grenoble, Grenoble, France

Peer reviewed :

Peer reviewed

Available on ORBilu :

since 19 January 2022

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