Board of Director’s Composition and Corporate Cash Holdings: Evidence from French Listed Companies

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This study aims to determine the relationship between board of director’s composition and level of corporate cash holdings. The study was conducted Using French sample of listed companies on the SBF 120 index over the period of 2006-2014. The study provides significant intermediate results concerning implementation of Copé-Zimmermann law. We find that, on average, French firms hold 7% of their total net assets as cash and cash equivalents, over the period of 2006-2014. The empirical findings reveal that, board of director’s composition significantly reduces corporate cash holdings through board independence and thus agency conflict of high cash holding would be lower in presence of more independent directors. Moreover, study also reveals that amount of cash increases significantly, in presence of controlling shareholders.

Author(s):

Aitzaz Ahsan Alias Sarang    
IAE Aix en Provence
France

Nicolas Aubert    
CERGAM, Aix Marseille University & Inseec Business School
France

Xavier Hollandts    
Kedge Business School
France