How Blockholders Influence Corporate Cash Holding: Evidence from ESG Leaders
windasari rachmawati, abdul karim,hani krisnawati,abdul manan, apsari artanti nur agustin, aura rossa noverita

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Semarang University

Abstract

This study examines the effect of blockholder ownership on corporate cash holding and investigates the moderating role of firm size and market-to-book ratio in this relationship. The research is grounded in two primary perspectives within the corporate cash holding literature: the precautionary motive and agency theory. Using a sample of 30 firms listed in the IDX ESG Leaders Index from 2020 to 2023, the study employs STATA to analyze the proposed relationships. The findings reveal that blockholder ownership has a positive and significant effect on corporate cash holding, implying that large shareholders tend to encourage firms to retain higher levels of cash to enhance financial flexibility and mitigate uncertainty. Furthermore, firm size significantly strengthens the relationship between blockholder ownership and cash holding, indicating that larger firms possess greater internal resources and better access to external financing, which enhances their liquidity management efficiency. However, the moderating effect of the market-to-book ratio is found to be insignificant. These results contribute to a deeper understanding of how ownership structure and corporate characteristics interact in shaping firms^ liquidity policies, particularly within the context of sustainability-oriented firms included in the ESG Leaders Index.

Keywords: : blockholder ownership, cash holding, strategic shareholders, firm size, ESG Leaders, market-to-book ratio

Topic: Environmental Sustainability in Coastal Cities