Abstract
Profits that are calculated to finance unexpected cash need expedite management. This paper investigates the effect of corporate governance on cash holdings with systematic risk as a moderating variable. The population consists of companies from the property and real estate sectors listed on the Indonesia Stock Exchange (IDX) during 2012–2020. Through the purposive sampling technique, the sample obtained 41 companies as the study object. Data analysis is focused on panel data and its interpretation through the Moderated Regression Analysis (MRA). Hypothesis testing uses statistical terms at the 5% probability level. Important findings underline that corporate governance has a positive significant effect on cash holdings, while systematic risk has a negative insignificant effect. On the other hand, the moderation between corporate governance and cash holdings through systematic risk is positive significant. Systematic risk reflects the reliability of a stock; when the risk is higher, it tends to increase in cash flow situations, and investors prefer high-risk investments with the expectation of profit from returns. It is hoped that future contributions will serve as reference material for academics, government, and companies engaged in the financial service sector.
Highlights
It is highly important for every company to have cash, otherwise its operations cannot be performed properly
Referring to cash holding calculations to the property and real estate company as a sample of Indonesia stock exchange 2012–2020 period can be averaged from Figure 2
Corporate governance has a positive and powerful impact on cash held by property and real estate companies
Summary
It is highly important for every company to have cash, otherwise its operations cannot be performed properly. In the number of which loads can create conflicts agency because the manager has the desire to gain domination over an investment decision the company as a basic interest self (Jensen, 1986; Azis et al, 2020). Many researchers study of cash holding, but the results of their research work are inconsistent. Relevant studies related to corporate governance and cash holding have been highlighted by various researchers and produce a variety of evaluations (Cheung, 2016; Harford et al, 2008; Dittmar & Mahrt-Smith, 2007; Khan et al, 2016)
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