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Investment Committees and Corporate Cash Holdings

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2022-07-22
Authors
Al-Hadi, Al-Hadi Ahmed
Eulaiwi, Baban
Al-Yahyaee, Khamis
Duong, Lien
Taylor, Grantley
Date
2020
Type
Journal Article

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Al-Hadi, A. and Eulaiwi, B. and Al-Yahyaee, K. and Duong, T.H.L. and Taylor, G. 2020. Investment Committees and Corporate Cash Holdings. The North American Journal of Economics and Finance. 54 (Article number 101260): Article No. 101260.
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The North American Journal of Economics and Finance
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Faculty
Faculty of Business and Law
School
School of Accounting, Economics and Finance
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Abstract

We investigate the association between the voluntary formation of a board investment committee (IC) and corporate cash holdings for a large sample of Gulf Cooperation Council (GCC) firms over the 2005–2013 period. We provide evidence that the existence of a specialized IC increases corporate cash holdings. We also find that several IC characteristics, i.e., member experience, independence, number of meetings, and committee size, are associated with an increase in firms’ cash holdings. Furthermore, the local and foreign institutional ownership of GCC firms moderates the IC-cash holdings relationship. These results remain robust to alternative specifications of cash holdings and endogeneity tests. We contribute to the literature on firms’ incentives to hold cash and to the literature on governance in emerging market contexts.