Is family control relevant for corporate cash holding policy?
- Rodrigo F. Durán Gonzales
- Mª Belén Lozano García
- Serhat Yaman
ISSN: 1468-5957
Año de publicación: 2016
Volumen: 43
Número: 0
Páginas: 1325-1360
Tipo: Artículo
Otras publicaciones en: Journal of Business Finance & Accounting
Resumen
This empirical research examines the effect of family control on firms' cash holding policy. Using a sample of Western European firms, we confirm the precautionary motive for holding cash as family-controlled firms' desire to perpetuate the family legacy for future generations motivates them to accumulate more cash than their non-family counterparts. We also show that, given family-controlled firms' long-term perspective, they focus on cash flow volatility rather than cash flow level. Finally, the relation between financing constraints and cash holdings is not homogeneous: financially constrained family-controlled firms hold higher levels of cash than financially constrained non-family firms. Overall, these results suggest that family firms' cash holding policy is the result not of a specific financial outcome but rather on the strategic objectives of the firm. [ABSTRACT FROM AUTHOR]