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The market value of cash holdings from related-party sales: The role of source of cash flows
- Issue Date
- Sep-2024
- Publisher
- Accounting Association of Australia and New Zealand
- Keywords
- corporate governance; market value of cash holdings; related-party transactions; resource allocation; source of cash flows
- Citation
- Accounting & Finance, v.64, no.3, pp 2915 - 2948
- Pages
- 34
- Indexed
- SSCI
SCOPUS
- Journal Title
- Accounting & Finance
- Volume
- 64
- Number
- 3
- Start Page
- 2915
- End Page
- 2948
- ISSN
- 0810-5391
1467-629X
- Abstract
- This paper finds that investors evaluate cash holdings differently based on the source of cash flows. Using cash flows from related-party sales as a proxy for diverse sources, we find that shareholders discount the value of cash holdings for firms with higher cash flows from related-party sales. We find that firms use related-party sales cash flows differently; cash flows from related-party sales are more likely to be retained as internal cash reserves or distributed as dividends, rather than utilised for necessary investments. We further document a negative valuation of investments for firms with more related-party sales.
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Collections - Dongguk Business School > Department of Accounting > 1. Journal Articles
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Related Researcher
- Jung, Sun Moon
- Dongguk Business School (Department of Accounting)