''The bright side of CEO-board social ties: Evidence from French firms' cash holdings''
( 2021, Vol. 41 No.4 )
We test the hypothesis that CEO-board social ties facilitate corporate financing. Our empirical approach is based on the precautionary motive for holding cash, which implies that firms hold more cash if they have more growth opportunities or if their cash flows are more volatile. Using a sample of French firms over the period 2006-2017, we show that firms with board-connected CEOs are less sensitive to these two factors, suggesting easier access to external finance. The results take into account the dynamic and endogenous nature of the relationship between board composition and cash holdings.
