CEO organizational identification and firm cash holdings |
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Authors: | Meihua Zhou Jian Cao Bin Lin |
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Institution: | 1. School of Accountancy, Jiangxi University of Finance and Economics, 169 East Shuanggang Road, Nanchang, Jiangxi 330013, China;2. School of Economics and Management, Harbin Institute of Technology, Shenzhen HIT Campus of University Town of Shenzhen, Shenzhen, Guangdong 518055, China;3. School of Business, Sun Yat-sen University, 135 Xingang West Road, Guangzhou, Guangdong 510275, China |
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Abstract: | As the decision-makers and implementers of a firm’s financial strategy, executives play a critical role in cash holding activities, and their psychological characteristics have a major impact on cash holdings. This paper investigates the association between CEO organizational identification and firm cash holdings. The empirical results show that CEO organizational identification is negatively associated with firm cash holdings, and the negative association is more pronounced when the level of financial development is higher and economic uncertainty is lower. Further analysis reveals that the higher a CEO’s organizational identification, the higher the firm’s R&D investment and capital expenditure, and high CEO organizational identification can increase the value of firm cash holdings. Overall, our findings supplement the literature on organizational identification and cash holdings, and on the effect of executives’ psychological characteristics on corporate financial decision-making. |
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Keywords: | CEO organizational identification Financial development Economic policy uncertainty Cash holdings |
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