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The governance role of multiple large shareholders: evidence from the valuation of cash holdings

Author

Listed:
  • Najah Attig
  • Sadok El Ghoul
  • Omrane Guedhami
  • Sorin Rizeanu
Abstract
This paper investigates the governance role of multiple large shareholders (MLS, henceforth), as evidenced by their impact on the valuation of cash holdings. For a sample of 2,723 firms from 22 countries, we find that the presence of MLS enhances the valuation of firms’ cash holdings. In particular, we show that the valuation of cash is positively associated with an even distribution of blockholders’ voting rights and with higher contestability of the largest shareholder’s control. We also show that the impact of MLS on the valuation of cash holdings is more pronounced for family-controlled firms, consistent with investors perceiving family owners as associated with greater expropriation risk. Overall, our results contribute to the literature on corporate governance by showing that MLS improve internal monitoring and moderate the agency costs of firms’ cash holdings. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Najah Attig & Sadok El Ghoul & Omrane Guedhami & Sorin Rizeanu, 2013. "The governance role of multiple large shareholders: evidence from the valuation of cash holdings," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 419-451, May.
    • Handle: RePEc:kap:jmgtgv:v:17:y:2013:i:2:p:419-451
    DOI: 10.1007/s10997-011-9184-3
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