| dc.description.abstract | Abstract The Asian Financial Crisis in 1997 and
various other scandals in large companies in Indonesia led
to the emergence of good corporate governance (GCG).
Regulators on the capital markets understand that good
corporate governance promotes transparency and improves
the quality of financial reporting, including cash
management, responsibly. Furthermore, high cash levels
lead managers to misuse the fund for personal gain,
because the assets under their supervision increase thereby.
This research analyzes the effect of corporate governance,
such as board size, and independence on cash holding in
Indonesia. Data were obtained from 373 firms in seven
industries publicly tabulated on Indonesia Stock
Exchanges (IDX) from 2008-2017 and 2,742 firm-year
observations. The obtained data were analyzed using
Common, Fixed, and Random Effects Models. The result
showed that the total number of the board of directors, is
positively and significantly proportional to Board Size
thereby increasing the company holds cash. Meanwhile,
the other corporate governance variable, known as Board
Independence, is insignificant in any three models. The
result also showed positive coefficients of board size on
cash holding (CASH) in companies with and without CEO
duality. The result further showed that the independent
board had a significant and negative impact on cash
holding (CASH), which is more pronounced in companies
with CEO duality and used to strengthen corporate
governance. The results have specific policy implications
like the importance of corporate governance, in particular
the role of the Board of Directors in the effective
supervision of managers and transparency of enterprises.
Keywords Corporate Governance, Board Size, Board
Independent, Cash Holding | en_US |
