Corporate Governance and Cash Holdings in Canadian Firms

In context of the Canadian markets, the aim of this study was to establish a relationship between corporate governance and cash holdings and Using governance metrics based on Globe and Mail Corporate governance data, we find that governance has a substantial negative impact on the cash holdings of the firms.When segregated on the basis of size, smaller size firms have shown consistent results when compared with the overall market result.On the other hand, no conclusive evidence could be established for bigger size firms.Our results are consistent with the assumption that investors in companies with poor shareholder protection cannot force managers to disgorge excessive cash balances.This research provides a platform for future research in context of the Canadian markets that will further explore the relationship between corporate governance and cash holdings.