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Browsing by Author "El Ghoul, Sadok"

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    Economic Policy Uncertainty, Institutional Environments, and Corporate Cash Holdings
    El Ghoul, Sadok; Guedhami, Omrane; Mansi, Sattar A.; Wang, He Helen (2022-10-11)
    We investigate the effect of economic policy uncertainty (EPU) on corporate cash holdings using a large sample of international firms. EPU intensifies concerns of investors on managerial self-dealing and political extraction. Consequently, the potential cost of cash holdings (i.e., expropriation) outweighs its benefit (i.e., precautionary motives), and the optimal amount of cash holdings decreases. We find supportive evidence that firms hold less cash when EPU is high. We further show that the market discounts excess cash holdings under high policy uncertainty, but this negative effect is mitigated by stronger investor protection, better freedom of press, and better government quality.
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    Institutional Shareholder Attention, Agency Conflicts, and the Cost of Debt
    El Ghoul, Sadok; Guedhami, Omrane; Mansi, Sattar A.; Yoon, Hyo Jin (Institute for Operations Research and Management Sciences, 2020-01-15)
    Using Kempf, Manconi, and Spalt’s (2017) measure of shareholder inattention, constructed from exogenous industry shocks to institutional investor portfolios, we find that firms with distracted shareholders are associated with a higher cost of debt. This effect is stronger for firms with more powerful CEOs, higher information asymmetry, and those operating in less competitive product markets. Further testing suggests that the inattention–cost of debt relation is driven primarily by dual holders directly observing shareholder distraction. Our results are robust to controlling for inattention at the retail investor level and to other external monitors, including credit rating agencies, financial analysts, and Big 4 auditors. Overall, our evidence suggests that institutional shareholder inattention has an incrementally negative effect on bond pricing.