Independent Directors From Supply‐Chain Industries and Excess Cash Holdings

View at publisher
Authors: Xinyu Li, Rong Li
Cited by: 0
References: 56

Abstract

ABSTRACT A firm's independent directors often serve elsewhere and transmit diverse information across interlocked firms, influencing their advising and monitoring roles. This paper delves into the role of independent directors from supply‐chain industries (IDSCIs) and explores their influence on corporate excess cash holdings. Using a sample of listed US firms from 2000 to 2019, we find that IDSCIs significantly reduce excess cash holdings, especially when firms confront heightened general uncertainty, encounter greater uncertainty due to information asymmetry with their upstream/downstream industries or exhibit weaker corporate governance. Both upstream and downstream independent directors contribute positively. Furthermore, we also observe that IDSCIs enhance firm performance. Our research contributes to the existing literature on the impact of independent directors on corporate cash holdings and offers insights for firms in appointing independent directors, investors in investment evaluation and regulators in refining governance regulations.

Fields of Study & Subjects

Corporate Finance and Governance Sustainable Finance and Green Bonds Corporate Insolvency and Governance

Publication details

Journal / source
Accounting and Finance
Volume
66
Issue
2
Pages
1626–1642
Publication date
7 January 2026
Language
EN