Kevin Troy Chua

The management of an entity faces diverse decisions concerned with corporate operations and financing choices. Investigating various factors affecting a company’s cash holdings provides valuable insights into the decision-making processes of an organization. This study examines the effect of Anti-Takeover Provisions (ATPs), Managerial Overconfidence, and their interaction on the level of an entity’s cash holdings. Conducting a regression analysis, this study examines 3,409 firm-year observations from Korean listed entities covering 2011 to 2018. Results reveal that anti-takeover provisions positively influence an entity’s cash holdings (coefficient = 0.464, t-stat value = 7.83). Additionally, managerial overconfidence negatively affects cash holdings (coefficient = –0.140, t-stat value = –2.77). Furthermore, the interaction between anti-takeover provisions and managerial overconfidence significantly influences cash holdings (coefficient = –0.402, t-stat value = –3.46), especially in firms employing specific provisions such as supermajority vote requirements for executive dismissal (coefficient = –0.445, t-stat value = –2.73), issuance of convertible preferred stock (coefficient = –0.341, t-stat value = –1.76), and golden parachutes (coefficient = –0.715, t-stat value = –3.02). This study provides empirical evidence on how anti-takeover provisions and managerial traits influence corporate cash reserves. The study offers valuable insights for regulators, investors, and corporate management. It also emphasizes prudent cash management, urging firms, especially those with anti-takeover provisions and overconfident management, to reconsider financial policies to mitigate risks associated with aggressive decision-making.

This study examines the effect of corporate governance on a company’s cash holdings, focusing on a firm’s compliance levels with core corporate governance indicators as outlined in the corporate governance report. Utilizing a random effect generalized least squares (GLS) regression model, this study evaluates 812 firm-year observations from Korean publicly traded companies covering the period 2018 to 2021. The results indicate that companies with robust governance structures generally maintain lower levels of cash holdings (coefficient = –0.0263, p-value = 0.044), corroborating the flexibility hypothesis. Moreover, higher compliance levels with governance matters concerning shareholder protection (coefficient = –0.0388, p-value = 0.090) and board of directors (coefficient = –0.0512, p-value = 0.052) are associated with reduced cash holdings. Further analysis, accounting for a firm’s organizational capital, underscores that the inverse relationship between corporate governance and cash holdings is more pronounced in organizations with lesser organizational capital (coefficient = –0.0548, p-value < 0.01). This study contributes empirical evidence showing that strict compliance with core corporate governance indicators, indicative of strong corporate governance, substantially affects a firm’s cash management. Additionally, this study offers valuable insights for regulatory authorities and investors and enhances the existing body of knowledge on the interplay between corporate governance and cash holdings.

Concerns for the environment and sustainability require entities to contribute to societal development toward sustainable advancement. There is also an increasing demand for high-quality and reliable reports on sustainability-related matters. The study aims to highlight the impact of sustainability reporting initiatives on financial performance through the GRI reporting framework and four determinants of financial performance – return on assets (ROA), return on equity (ROE), and basic and diluted earnings per share (EPS). Conducting random effects generalized least square (GLS) regression, this paper examines 127 firm-year observations from 47 Philippine listed entities covering 2019–2021. The results show a significant negative relationship between the total sustainability reporting initiative index score and financial performance, represented by return on equity (coefficient = –0.4690, z-value = –1.68). Moreover, there is a positive significant relationship between economic reporting and financial performance, particularly return on assets, basic earnings per share, and diluted earnings per share (coefficients = 0.1590, 12.6200, 12.6500; z-values = 3.11, 1.72, 1.73). A negative significant relationship exists between social reporting and financial performance, particularly return on equity and basic and diluted earnings per share (coefficients = –0.5530, –14.1600, –14.1400; z-values = –2.04, –2.65, –2.65). This study pioneers an investigation into the nascent implementation of Securities and Exchange Commission (SEC) sustainability reporting and the implications of sustainability initiatives on corporate performance in the Philippines. The results shed light on the dynamics of sustainability initiatives and financial outcomes to encourage firms to harmonize economic success with environmental preservation and societal advancement toward value creation.