The Impact of Board Stability on Investment Efficiency and Excess Cash Holdings

Alizadeh, Hassan; Rastegarmoghadam, Vejahat

doi:10.22034/necsbm.2023.404836.1013

The Impact of Board Stability on Investment Efficiency and Excess Cash Holdings

Document Type : Original Article

Authors

Hassan Alizadeh ¹

Vejahat Rastegarmoghadam ²

¹ Assistant professor, accounting department,, Mashhad branch, Islamic Azad University, Mashhad, Iran

² M.A. in accounting, accounting department,, Mashhad branch, Islamic Azad University, Mashhad, Iran

10.22034/necsbm.2023.404836.1013

Abstract

Managers with stability have the ability to direct the excess cash flows within the company towards effective and profitable investment opportunities. The main objective of this research is to examine the relationship between board stability, investment efficiency, and excess cash holdings.
Design/method/methodology: The statistical population of this study consists of active companies in the Tehran Stock Exchange, with a systematic selection of 140 companies over the period from 2015 to 2022. This research is applied in terms of objective and utilizes multiple linear regression based on panel data to test the hypotheses.
Findings: The research findings indicate a significant and positive relationship between board stability and investment efficiency. In other words, companies with more stable board members have higher investment efficiency. Furthermore, the results show a significant and negative relationship between board stability and excess cash. Companies with higher board stability have lower levels of excess cash. These findings suggest that board stability plays an important role in investment efficiency and cash management in companies.

Keywords

Board stability

investment efficiency

excess cash

Subjects