Author： Luo Qi Hachiya Toyohiko
Publisher： Emerald Group Publishing Ltd
ISSN： 0140-9174
Source： Management Research News, Vol.28, Iss.4, 2005-04, pp. : 61-73
Disclaimer: Any content in publications that violate the sovereignty, the constitution or regulations of the PRC is not accepted or approved by CNPIEC.
Abstract
This paper tests two views of bank's role for Japanese firms. The views are confronted with the empirical evidence, allowing them to compete to explain firm's cash holding decisions and the implication of cash holdings on firm value. We find that firms with closer bank relations hold less cash, but some of them are over-borrowing. Our results show that banks do not monitor their client firms and are unlikely to push the managers of the firms to take efficient actions on maximizing firm value. We discover that cash holdings cause more severe agency conflicts for the firms who have the closer relations with the banks.
Related content
Access to resources
Recommend
Factors affecting bank risk taking: Evidence from Japan
Journal of Banking and Finance, Vol. 28, Iss. 1, 2004-01 ,pp. :