Shareholder perks and cash holdings: Board influence in firms with and without perks

This study investigates the impact of shareholder perks (SHP) on cash holdings (CH) and examines whether the role of the board of directors (BOD) affects CH in shareholder-perk (SHP) and non-shareholder-perk (NON-SHP) firms in Japan. Using a sample of 3526 firms from 2005 to 2022, the findings show that firms with perk programs hold lower cash compared to their counterparts, reducing free cash flow agency conflicts. Independent directors and female directors encourage CH, indicating lower agency costs. In contrast, larger board size, executive directors, and male directors decrease CH, consistent with agency theory. In sub-sample analyses, independent and female directors encourage CH in both SHP and NON-SHP firms. In contrast, a higher number of executive and male directors decreases CH in NON-SHP firms while encouraging CH in SHP firms. Board size plays an effective role only in NON-SHP firms. Several econometric methods support the results. The findings illuminate the significance of SHP and board composition in cash management and corroborate the BOD's varied effect on CH policy.

Citation

Akhtar, T, Chen, L, Abdullah, M et al. (2025) Shareholder perks and cash holdings: Board influence in firms with and without perks, International Review of Economics and Finance, 101, Article 104165.

Type

Journal article

Language

en

Description

© 2025 The Authors. Published by Elsevier. This is an open access article available under a Creative Commons licence. The published version can be accessed at the following link on the publisher’s website: https://doi.org/10.1016/j.iref.2025.104165

ISSN

1059-0560

EISSN

1873-8036

Collections

Faculty of Arts, Business and Social Sciences