英文摘要 |
In this paper, I develop a theoretical model in which we explore cash holding as acorporate governance mechanism. By using this mechanism, shareholders restrain the selfinterestedbehavior of managers, such as increasing capital inputs when making investmentdecisions. I find that the optimal level of corporate governance intensity should be adjustedaccording to the severity of the managerial agency problem and the stages of thecompany’s industrial development. A stricter governance mechanism should be adoptedwhen the agency problem is more serious and the industry is more mature. Our findingsare summarized as follows. The application of governance mechanisms may be detrimentalto firm value when the firm grows at a fast rate. The optimal governance mechanism ismore intensive when external financing is allowed. For a firm with high asset liquidity andinsufficient information disclosure, a stringent governance mechanism should be applied toreduce over-investment problems. As such, the optimal intensity of corporate governancemechanisms should be flexible and dependent on various factors. |