TY - JOUR
T1 - Relationship Between the Characteristics of CEOs and Excess Cash Holdings of Firms
AU - Lim, Jaemin
AU - Lee, Sang Cheol
N1 - Publisher Copyright:
©, Copyright © Taylor & Francis Group, LLC.
PY - 2019/4/9
Y1 - 2019/4/9
N2 - This study investigates the relationship between excess cash holdings of firms and CEO characteristics, such as ownership type, presence of stock options, inclusion in a chaebol, and CEO tenure. Based on a sample of non-financial listed Korean companies for 2000–2014, we find first, that professional CEOs have higher excess cash holdings than owner-managers have. Second, longer CEO tenure lowers excess cash holdings but decreases the marginal impact of CEO tenure on excess cash holdings. Third, the effect of CEO affiliation to a chaebol on excess cash holdings was greater before the global financial crisis of 2008–2009 than after it. Excess cash holdings arise from agency problems and the CEO horizon problem but agency problems between minority and dominant shareholders have eased in Korea since the crisis.
AB - This study investigates the relationship between excess cash holdings of firms and CEO characteristics, such as ownership type, presence of stock options, inclusion in a chaebol, and CEO tenure. Based on a sample of non-financial listed Korean companies for 2000–2014, we find first, that professional CEOs have higher excess cash holdings than owner-managers have. Second, longer CEO tenure lowers excess cash holdings but decreases the marginal impact of CEO tenure on excess cash holdings. Third, the effect of CEO affiliation to a chaebol on excess cash holdings was greater before the global financial crisis of 2008–2009 than after it. Excess cash holdings arise from agency problems and the CEO horizon problem but agency problems between minority and dominant shareholders have eased in Korea since the crisis.
KW - agency problems
KW - CEO characteristics
KW - excess cash holdings
UR - http://www.scopus.com/inward/record.url?scp=85059013743&partnerID=8YFLogxK
U2 - 10.1080/1540496X.2018.1518778
DO - 10.1080/1540496X.2018.1518778
M3 - Article
AN - SCOPUS:85059013743
SN - 1540-496X
VL - 55
SP - 1069
EP - 1090
JO - Emerging Markets Finance and Trade
JF - Emerging Markets Finance and Trade
IS - 5
ER -