Corporate Cash Holdings and Ownership Structure: A Quantile Regression Analysis

Ghada Tayem, Mohammad Tayeh, Khawlah Spetan


This study examines the impact of ownership structure on firm cash policy in varying cash holding regimes, using 131 Jordanian nonfinancial firms listed on Amman Stock Exchange for the period 2005-2013. This study allows for the possibility that the impact of explanatory variables can vary for different levels of cash holdings by utilizing a quantile regression estimation method. Specifically, in this study we argue that the impact of ownership concentration will differ according to the examined quantile. Controlling shareholders are expected to overinvest in liquid assets that are not subject to market discipline and are less costly to turn into private benefits compared to other assets. However, the ability of controlling shareholders to do so may be affected by the level of cash holdings. Therefore, the positive association between cash holdings and ownership is expected to be elevated in high cash holding firms. The findings of this study showed that in estimation methods that focus on the central tendency of the distribution, ownership is not significantly related to cash holdings. However, in a quantile regression model, the findings demonstrated that ownership becomes more positive and significant in upper quantiles.


Cash holdings, quantile regression, agency problem, largest shareholder, Jordan.

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