The Journal of Asian Finance, Economics and Business

Korea Distribution Science Association (한국유통과학회)
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The Impact of Corporate Governance on Cash Holdings in the Context of Oman

  • DWAIKAT, Nizar (Business Faculty, Arab Open University - Palestine Branch)
  • Received : 2022.10.10
  • Accepted : 2023.01.15
  • Published : 2023.01.30
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Abstract

This study investigates the impact of corporate governance (defined as companies' ownership structure and board of directors' characteristics) on cash holdings in the context of Oman. This study leverages a quantitative panel pooled regression on a dataset of Omani non-financial firms from 2009-2015. The findings of this study are generally in line with the predictions of Agency Theory and Mentoring and Busyness Hypotheses. The analysis demonstrates that a large stockholder size has a significant positive relationship with cash holding. Meanwhile, a positive (but insignificant) relationship was also found between institutional ownership and cash holding. Furthermore, state ownership was found to exhibit a significant negative relationship with cash holding. In terms of the board of directors' traits, this study's findings suggest that board sizes have a positive (but insignificant) relationship with cash holding. Furthermore, busy and independent boards were found to have a significant positive relationship with cash holding. The above findings suggest that boards with such traits are less effective in providing oversight on managers' actions, which would then increase Omani non-financial firms' cash holdings.

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References

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