Evaluation of systematic risk, corporate governance, and cash holdings: evidence from Indonesia
Open Access
- 10 June 2021
- journal article
- Published by LLC CPC Business Perspectives in Economics of Development
- Vol. 20 (1), 35-45
- https://doi.org/10.21511/ed.20(1).2021.04
Abstract
Profits that are calculated to finance unexpected cash need expedite management. This paper investigates the effect of corporate governance on cash holdings with systematic risk as a moderating variable. The population consists of companies from the property and real estate sectors listed on the Indonesia Stock Exchange (IDX) during 2012–2020. Through the purposive sampling technique, the sample obtained 41 companies as the study object. Data analysis is focused on panel data and its interpretation through the Moderated Regression Analysis (MRA). Hypothesis testing uses statistical terms at the 5% probability level. Important findings underline that corporate governance has a positive significant effect on cash holdings, while systematic risk has a negative insignificant effect. On the other hand, the moderation between corporate governance and cash holdings through systematic risk is positive significant. Systematic risk reflects the reliability of a stock; when the risk is higher, it tends to increase in cash flow situations, and investors prefer high-risk investments with the expectation of profit from returns. It is hoped that future contributions will serve as reference material for academics, government, and companies engaged in the financial service sector.Keywords
This publication has 23 references indexed in Scilit:
- Corporate Governance and Cash Holdings: Evidence From the U.S. Property–Liability Insurance IndustryJournal of Risk and Insurance, 2014
- Aggregate Risk and the Choice between Cash and Lines of CreditThe Journal of Finance, 2013
- Cash holdings, risk, and expected returnsJournal of Financial Economics, 2012
- Determinants of Corporate Cash Holdings: Evidence from CanadaInternational Journal of Economics and Finance, 2011
- Firm diversification and the value of corporate cash holdingsJournal of Corporate Finance, 2011
- Corporate governance and firm cash holdings in the USJournal of Financial Economics, 2008
- Why do Cities Hoard Cash? Determinants and Implications of Municipal Cash HoldingsSSRN Electronic Journal, 2008
- Corporate governance and the value of cash holdingsJournal of Financial Economics, 2007
- Why Do Firms Hold Cash? Evidence from EMU CountriesEuropean Financial Management, 2004
- Agency Cost Of Free Cash Flow, Corporate Finance, and TakeoversSSRN Electronic Journal, 1999