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Related-Party Transactions, Chaebol Affiliations, and the Value of Cash Holdings

doi: 10.3390/su13020699
This study examines whether related-party transactions (RPTs) impact the value of firms’ cash holdings. Using a 2011–2018 sample of Korean public firms, we find that greater RPTs lead to lower cash holdings value. In particular, this decline is more pronounced in Korean chaebol firms than in non-chaebol firms. Our findings suggest that a unique and complex corporate governance structure of chaebol firms makes it difficult for outside investors to monitor firms’ internal cash management decisions, resulting in a negative valuation of cash holdings. This study contributes to the extant literature by providing additional evidence that RPTs in chaebol firms with severe agency problems may lower the value of cash holdings.
- Sungkyul University Korea (Republic of)
- Pukyong National University Korea (Republic of)
- College of Business Administration Latvia
- Pukyong National University Korea (Republic of)
- Sungkyul University Korea (Republic of)
Environmental effects of industries and plants, value of cash holdings, corporate governance, TJ807-830, TD194-195, Renewable energy sources, Environmental sciences, chaebol, GE1-350, related-party transactions
Environmental effects of industries and plants, value of cash holdings, corporate governance, TJ807-830, TD194-195, Renewable energy sources, Environmental sciences, chaebol, GE1-350, related-party transactions
citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).8 popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.Top 10% influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).Average impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.Top 10%
