M.A. Thesis:

The moderating effect of the domestic capital market and the relationship between the ability of managers and the rate of moderation of cash holdings

Using the partial adjustment model of cash holding, we find that managerial ability is negatively related to adjustment speed of cash holdings toward the target, particularly when the firm has excess cash. We also find that the relation between managerial ability and cash holding adjustment speed is weaker in the presence of the internal capital market. Additionally, we provide evidence that firms with higher managerial ability are less likely to make inefficient investments when they have excess cash, implying that high-ability managers are willing n 2013, Carl Icahn purchased Apple Inc.’s stocks and argued that Apple should utilize its cash holdings by redistributing them to equity investors through dividends and stock repurchases. Similarly, in 2016, Paul Singer, under the name of Elliott Management, requested Samsung Electronics Co. to hold a large amount of cash to make timely n 2013, Carl Icahn purchased Apple Inc.’s stocks and argued that Apple should utilize its cash holdings by redistributing them to equity investors through dividends and stock repurchases. Similarly, in 2016, Paul Singer, under the name of Elliott Management, requested Samsung Electronics Co. investments.

Keywords: Cash holdings; Internal capital market; Investment efficiency; Managerial ability; Partial adjustmen