CEO Reputation and Corporate Cash Holdings

The work presented in this thesis is, to the best of my knowledge and belief, original, except as acknowledged in the text. The material has not been submitted, either in whole or in part, for a degree at this or any other university. I Acknowledgements I would like to express my deepest gratitude towards Dr. Kelvin Tan, whose insightful guidance, generous help and encouragement have helped me to complete this thesis. Throughout the year, I have learned more from him than I ever anticipated. His passion for research is truly inspiring, but his dedication to his students is his most impressive accomplishment. Kelvin always responds to emails (even during his valuable weekends and public holidays) and he is always ready to help whenever we knock on his door. He consistently reaches out to ensure that his students are on the right track and doing well. I would like to also thank all the professors who have helped me during this difficult honours year. Without your kindly help, it would have been impossible for me to complete the honours degree program smoothly. I further want to thank all the participants who attended the UQBS research colloquium on 19 th July 2013. Your important and intuitive suggestions on my honours thesis helped me significantly. I would also like to show my deep gratitude to the University of Queensland (UQ). UQ is a world-class university that provide its students with a comfortable study environment and an excellent education. I am looking forwarding to having a closer relationship with UQ in the future. Lastly, I would like to thank my parents. Without their kind financial support, it would never have been possible for me to study at such a great university or to meet so many inspiring people. Abstract We investigate whether and to what extent CEO reputation affects both the level and the value of corporate cash holdings for US firms. We show that CEO reputation has a negative impact on the level of corporate cash holdings: the most reputable CEOs hold approximately 17% less cash than the least reputable CEOs. Furthermore, we find that the value of corporate cash holdings held by the most reputable CEOs is much higher than that held by the least reputable CEOs: the difference is approximately 44 cents per dollar for the average firm in our sample. In addition, we also find that the value of one …