WOMEN ON BOARD, FIRM SIZE AND CASH HOLDING: EMPIRICAL EVIDENCE FROM THE DEVELOPING COUNTRY

Abstract

Effective corporate board supervision might be a viable solution to the agency problem of excessive cash holdings (Fama & Jensen, 1983). Thus, this study aims to examine how the participation of women on corporate boards affects cash management. The study looks at how the size of a company affects the relationship between female board members and cash holdings, especially at high and low cash holding levels. A total of 373 publicly-listed companies in seven industries from 2008 to 2017 were chosen as research samples using purposeful sampling. Furthermore, static panel data processing was also used. The results showed that women on boards had a favorable and important impact. This study discovered a positive and significant WOB (women on board) coefficient, implying that companies with women on board had relatively more cash on hand. This result supports the trade-off and gender role theory predictions. However, the relationship between firm size and cash keeping is negative, but insignificant for all models. Different impacts were discovered by separating a sub-sample of companies with high and low cash holding rates. Women on the board of companies with large cash holding have a significant negative effect on cash holding. The partnership between women on boards and cash holding yielded negligible results. These findings have implications for regulators and corporate decision-makers in terms of board gender equality.