Cash holdings, ownership structure, corporate governance and firm value

This study investigates the relationship between cash holdings, managerial ownership, family ownership, government ownership, board size, board composition and firm performance by taking Indonesian manufacturing publicly listed firm as the sample over the period from 2011 to 2014. Fixed effect model and random effect
model are employed to analyse the relationship between those variables. The findings of this study reveal that cash holdings, family ownership, and government ownership are negatively correlated with firm value. The excess cash holdings are a sign that the firm tends to retain the cash rather than pay it via dividends and there is a possibility that the cash is employed for non-pecuniary benefits which is not analogous to the shareholders' interest. The negative relationship shown by family ownership might suggest that the firm is not being managed professionally. For government ownership, the negative relationship might indicate that the government is interested in fulfilling the social agenda rather than maximizing profit. The positive relationship is only exhibited by board size. Having a higher number of board members will increase the performance. This study also presents the relationship of variables among main board and development board in Indonesia
Stock Exchange. A more significant impact is perceived by the development board firms rather than main board firms