Impact of board, ownership and audit characteristics on cash holdings for listed companies in Jordan
This study aims to examine the relationship between the mechanisms of corporate governance (ownership structure, board characteristics, audit committee, and audit quality) on cash holdings in Jordan. Financial data from 2011 to 2017 was extrapolated from the companies listed under the industrial and...
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| Format: | Thesis |
| Language: | eng eng |
| Published: |
2019
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| Subjects: | |
| Online Access: | https://etd.uum.edu.my/10316/1/permission%20to%20deposit-grant%20the%20permission-902157.pdf https://etd.uum.edu.my/10316/2/s902157_01.pdf |
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| Summary: | This study aims to examine the relationship between the mechanisms of corporate governance (ownership structure, board characteristics, audit committee, and audit quality) on cash holdings in Jordan. Financial data from 2011 to 2017 was extrapolated from the companies listed under the industrial and services sector on Amman Stock Exchange, resulting in the final sample of 609 firms-year observations. Moreover, this study uses firm size, leverage and profitability as control variables. Two main theories, namely, agency theory and trade-off theory, are used to develop the framework of the study. By using generalized least square random-effect, the multiple regression analysis revealed a positive and significant relationship between multiple directorship, board gender, ownership concentration, managerial ownership, audit committee independence, audit tenure, audit fees, audit firm size, audit partner education background and cash holdings. These results indicate that corporate governance plays a vital role in enhancing the level of cash holding and reducing agency conflict. This study has several empirical implications for policy makers, investors, regulators, and market participants to encourage firms in Jordan to employ active audit committee who can provide better monitoring services and also benefit the firms with their experiences. It is also worth noting that the regulations need to specify the exact duties of audit committee independence and its selection process. In addition, these regulations need to be activated by the policy makers to ensure that firms comply with their requirements. Furthermore, this study opens up avenues for more studies on cash holding not only in Jordan, but also in other countries where this area of study is lacking. Moreover, developing countries are in need of providing better compliance with international governance standards. This can be done by adopting good governance practices, improving shareholder protection and activating laws and regulations that enhance cash holding. |
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