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Cash holdings in Sweden

Liedgren, Gustav and Carlsson, Pierre (2009)
Department of Business Administration
Abstract
Background:
In a perfect world, a company would not have to keep any cash at all but because of market imperfections created by information asymmetries and agency problems it has to. Previous research has suggested that a firm’s cash holding level is related to its size, growth opportunities and leverage. The Swedish market is particularily interesting to study from a corporate governance perspective, due to a number of specific features such as family ownership, dual class shares, and foreign listing of major companies. Purpose:
The purpose of this study is to investigate the cash holding behaviour among Swedish firms and to study how different corporate governance variables impact cash holdings.
Method: A quantitative approach using... (More)
Background:
In a perfect world, a company would not have to keep any cash at all but because of market imperfections created by information asymmetries and agency problems it has to. Previous research has suggested that a firm’s cash holding level is related to its size, growth opportunities and leverage. The Swedish market is particularily interesting to study from a corporate governance perspective, due to a number of specific features such as family ownership, dual class shares, and foreign listing of major companies. Purpose:
The purpose of this study is to investigate the cash holding behaviour among Swedish firms and to study how different corporate governance variables impact cash holdings.
Method: A quantitative approach using regression analysis have been used. Results:
Swedish firms hold more cash than firms from other nations. The cash holding behaviour of Swedish firms is larglely similar to that of firms from other nations, in that size and leverage are highly influential. Further, foreign listing and insider holdings mitigates cash holdings, suggesting a decrease in information asymmetries. In contrast to previous studies, we show that CEO presence on the board decreases the cash holdings of a firm. Conclusions: Corporate governance influence cash holdings of Swedish firms, but not in ways previously suggested by studies made on other countries. The impact of family ownership is beneficial to shareholders and the debate regarding dual shares is overrated. (Less)
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author
Liedgren, Gustav and Carlsson, Pierre
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Management of enterprises, Family ownership, Information asymmetries, Agency problems, Cash holdings, Corporate governance, Företagsledning, management
language
Swedish
id
1437315
date added to LUP
2009-06-04 00:00:00
date last changed
2012-04-02 17:42:07
@misc{1437315,
  abstract     = {Background:
In a perfect world, a company would not have to keep any cash at all but because of market imperfections created by information asymmetries and agency problems it has to. Previous research has suggested that a firm’s cash holding level is related to its size, growth opportunities and leverage. The Swedish market is particularily interesting to study from a corporate governance perspective, due to a number of specific features such as family ownership, dual class shares, and foreign listing of major companies. Purpose:
The purpose of this study is to investigate the cash holding behaviour among Swedish firms and to study how different corporate governance variables impact cash holdings.
Method:	A quantitative approach using regression analysis have been used. Results:
Swedish firms hold more cash than firms from other nations. The cash holding behaviour of Swedish firms is larglely similar to that of firms from other nations, in that size and leverage are highly influential. Further, foreign listing and insider holdings mitigates cash holdings, suggesting a decrease in information asymmetries. In contrast to previous studies, we show that CEO presence on the board decreases the cash holdings of a firm. Conclusions: Corporate governance influence cash holdings of Swedish firms, but not in ways previously suggested by studies made on other countries. The impact of family ownership is beneficial to shareholders and the debate regarding dual shares is overrated.},
  author       = {Liedgren, Gustav and Carlsson, Pierre},
  keyword      = {Management of enterprises,Family ownership,Information asymmetries,Agency problems,Cash holdings,Corporate governance,Företagsledning,management},
  language     = {swe},
  note         = {Student Paper},
  title        = {Cash holdings in Sweden},
  year         = {2009},
}