Celebrating Success: Dr Vu Trinh (Rainy) and Dr Marwa Elnahass

Congratulations to Rainy Trinh and Marwa Elnahass for their paper, co-authored with Dr Rosie Cao (University of Bath) ‘The Value Relevance of Bank Cash Holdings: The Moderating Effect of Board Busyness’ which has been accepted for publication in Journal of International Financial Markets, Institutions and Money. This study examines the value relevance of bank cash holdings information and the moderating effect of board outside multiple directorships on such relevance.

Abstract: This study examines the value relevance of bank cash holdings information and the moderating effect of board outside multiple directorships on such relevance. Our sample is based on a dual-banking system (i.e., conventional and Islamic banks) which represents 70 listed banks for the period from 2010 to 2018. On average, our analysis indicates that investors negatively valued banks’ holdings of large free cash flow. However, having busy board outside members, who are able to monitor that free cash reserves more effectively, tends to enhance the public confidence and in turn, cancel out the negative value relevance of cash holding information. In addition, such benefits of appointing busy board members have been reduced in the context of Islamic banking, which requires stricter monitoring by boards due to the complex business model adopted, distinctive systems of governance, and higher agency conflicts as compared to conventional banking.