The Impact of Corporate Governance Characteristics on Cash Holdings in Non-Financial Saudi Firms: Empirical Study

Abstract

The aim of this paper is to study the impact of corporate governance characteristics on corporate cash holdings in the Saudi context.  To achieve this goal, hypotheses are developed and tested using a sample of non-financial Saudi firms for the period 2017-2019. The results show a negative relationship between board independence, the frequency of board meetings, and executives ownership on hand, and cash holdings on the other hand. These findings are in line with the argument that better corporate governance is associated with lower agency costs around corporate cash holdings. In an additional analysis, the abovementioned relationships disappear in sectors with intense competition, providing further empirical support to the previously stated explanation.