Review of Quantitative Finance and Accounting

, Volume 53, Issue 3, pp 663–699 | Cite as

Multiple directorships and the value of cash holdings

  • Ting-Kai ChouEmail author
  • Hsuan-Ling Feng
Original Research


This study examines the impact of multiple directorships on the value destruction associated with increases in cash holdings. We find that the marginal value of cash increases with multiple directorships. Furthermore, the positive relationship between cash value and multiple directorships is more pronounced for firms with higher managerial agency problems. Additional analyses suggest that multi-board directors limit a firm’s holdings of excess cash, and especially directors having current industry affiliations have better ability to perform their monitoring function. Firms with multi-board directors make better cash acquisitions. Multiple directorships improve subsequent operating performance associated with capital expenditures and R&D investments. When firms have limited investment opportunities, multiple directorships result in more dividend payouts of cash. Collectively, our results suggest that multiple directorships are associated with a more efficient use of cash, thereby providing direct benefits to shareholders.


Multiple directorships Cash holdings Agency costs Market value 

JEL Classification

G12 G34 G35 



We thank Mia Twu, Chia-Ling Lee, Yueh-Chiao Lin, Lee-Young Cheng, workshop participants at National Cheng Kung University, National Cheng Chi University, National Chung Cheng University, Chung Yuan Christian University, and National Dong Hwa University, and participants at the 2014 AAA Annual Meeting, the 22nd Conference on the Theories and Practices of Securities and Financial Markets, the 2014 International Conference of Taiwan Finance Association for helpful comments and suggestions. Ting-Kai Chou gratefully acknowledges financial support from the National Science Council of Taiwan (NSC 101-2410-H-194-044). The paper won the best paper award at the 2014 International Conference of Taiwan Finance Association.


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© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of AccountancyNational Cheng Kung UniversityTainanTaiwan
  2. 2.Department of Marketing and Distribution ManagementTzu Chi University of Science and TechnologyHualien CityTaiwan

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