Does CEO ownership reduce corporate cash holdings? The moderating role of firm characteristics in an emerging market

Abstract

Type of the article: Research ArticleAbstractThe worldwide rise in corporate cash reserves, particularly across emerging markets with weak investor protection and concentrated ownership, has made the governance of corporate liquidity an increasingly important research question. This study examines whether CEO ownership influences corporate cash holdings among Vietnamese listed firms, and whether this relationship is moderated by market power and state ownership. Using a panel of 580 non-financial listed firms and 7,929 firm-year observations over 2008–2024, the analysis employs Feasible Generalized Least Squares (FGLS) and two-step System Generalized Method of Moments (System GMM) estimators. The results reveal a consistent negative association between CEO ownership and corporate cash holdings: the CEO-ownership coefficient is negative and statistically significant in the baseline model and remains so across all six baseline and robustness specifications, two alternative cash measures, a one-period-forward model, and the dynamic System GMM estimator. Further checks using alternative trimming and winsorizing thresholds, three ownership subgroups, and a quadratic specification confirm that the relationship is monotonic rather than U-shaped and is not driven by a small number of high-ownership firms. The cash-reducing effect is conditional on firm characteristics: the interactions of CEO ownership with market power and with state ownership are both positive and statistically significant, indicating that competitive dominance and government backing each attenuate this effect. These findings support the alignment hypothesis of agency theory, while showing that the disciplinary role of CEO ownership is bounded by market structure and the ownership environment.