文档介绍：Corporate Governance and a Firm’s Cash Holdings♣

Jarrad Harforda,*, Sattar A. Mansib, and William F. Maxwellc

aSchool of Business, University of Washington, Box 353200, Seattle, WA 98195
bPamplin College of Business, Virginia Tech, 1016 Pamplin Hall, Blacksburg, VA 24061
cEller School of Business, University of Arizona, Box 210108, Tucson, AZ 85721

October 24, 2005

Abstract
We examine the relation between the management of cash holdings and a corporate governance
index that includes various antitakeover provisions. Using data from the Investor Research
Responsibility Center for the period 1993 through 2002, we find that firms with high antitakeover
provisions (weak shareholder rights) have smaller cash reserves. Further tests suggest that firms
with weak shareholder rights dissipate their cash reserves far more quickly than do managers of
firms with strong shareholder rights, primarily through acquisitions. We find some evidence that
firms with weak shareholder rights raise more cash from financing activities. We also find
differences in the source of the cash from the financing activities based on governance structure.
Firms with weak shareholder rights are more likely to issue debt and less likely to issue equity. Our
results, which contrast with recent research on the cross-country relation between shareholder rights
and cash holdings, help us understand how country level shareholder rights interact with firm-level
agency problems and shareholder power.

Key Words: Cash holdings, corporate governance, shareholder rights, acquisitions, entrenchment
JEL classification: G31, G34

♣The authors would like to thank Murillo Campello, Mike Cliff, Kathy Kahle, Sandy Klasa, Scott Lee, Karl Lins, Ed
Rice, Jan Mahrt-Smith, and Laura Starks for their ments and suggestion. The remaining errors are the sole
responsibility of the authors.
* Corresponding author: Tel.: (206) 543-4796; fa