Military CEOs and firm dividends and cash holdings
International Journal of Managerial Finance
ISSN: 1743-9132
Article publication date: 26 September 2023
Issue publication date: 13 May 2024
Abstract
Purpose
The purpose of this study is to examine the relationships between chief executive officers (CEOs) with military service and firm dividend and cash holding decisions.
Design/methodology/approach
The authors use a sample of Standard and Poor's (S&P) 1500 firms in the USA over a sample period from 1999 to 2017 and a panel data approach, as well as instrumental variable (IV)analysis. The models control for firm characteristics as well as industry and year-fixed effects.
Findings
The results show CEOs with military service are associated with higher total payout and less cash. Higher dividends appear to drive the total payout result. When cash holdings are split into pure cash and short-term investments, the reduction in cash holdings is driven by a reduction in pure cash. The findings are more pronounced for powerful CEOs and CEOs with low labor mobility. Military CEOs are also associated with less risk, measured by stock return volatility and return on assets (ROA) volatility.
Originality/value
Overall, the results are consistent with military CEOs implementing conservative policies that reduce firm risk, curtailing the demand for precautionary cash and reducing the necessity to forego dividend payouts.
Keywords
Acknowledgements
Since acceptance of this article, the following author have updated their affiliations: Zhe Li is at the Department of Accounting, Finance and Business Law, University of Colorado Colorado Springs (UCCS), Colorado Springs, Colorado, USA.
Citation
Le, N.H., Li, Z. and Ramsey, M. (2024), "Military CEOs and firm dividends and cash holdings", International Journal of Managerial Finance, Vol. 20 No. 3, pp. 748-767. https://doi.org/10.1108/IJMF-08-2022-0355
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited