Corporate Financial Policy and Business Strategies

PhD Thesis
Start Year: 
2017

Τhis research aims to investigate whether firms manage cash holdings efficiently. CEOs utilize this information in decision making over significant investment projects. Considering the cash inflows in a firm, a manager may choose to distribute the cash to investors in the form of dividends, reinvest, or just stash the cash. Excess cash holdings increase a firm's investment potential, making it capable of investing in various impending opportunities independently, without the assistance of outside investors. The study explores whether and how managerial ability and discretion impacts corporate financial policy. It is expected that more gifted CEOs make better use of cash, increasing firm’s marginal value of cash. The research will include robustness checks such as individual components of strategy and investment, year-by-year and industry-by-industry analysis, controlling for firm fixed-effects, first-differenced specifications, and sensitivity analyses.