Reference : Excess Control Rights, Multiple Large Shareholders, and Corporate Cash Holding Behavior
Scientific congresses, symposiums and conference proceedings : Unpublished conference
Business & economic sciences : Finance
Excess Control Rights, Multiple Large Shareholders, and Corporate Cash Holding Behavior
Benkraiem, Ramzi mailto [Audencia Business School]
Boubaker, Sabri mailto [EM Normandie Business School, Métis Lab, France]
Derouiche, Imen mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) >]
Galariotis, Emilios mailto [Audencia Business School]
10th International Conference Financial Engineering and Banking Society
30-09-2021 to 01-10-2021
IAE Lille University School of Management
[en] Excess control rights ; Corporate cash holding behavior ; Multiple large shareholders
[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.

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