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Sharia compliance, national governance, and value of cash in Organization of Islamic Cooperation countries

Business

Sharia compliance, national governance, and value of cash in Organization of Islamic Cooperation countries

N. Chen and M. Yu

This intriguing study by Naiwei Chen and Min-Teh Yu explores how Sharia compliance and national governance influence corporate cash holdings in OIC countries, revealing that strong governance enhances the value of cash, especially for Sharia-compliant firms. Discover the symbiotic relationship between internal and external governance mechanisms!... show more
Abstract
This study examines whether and how Sharia compliance and national governance affect the value of corporate cash holding (cash) in Organization of Islamic Cooperation (OIC) countries. Study results indicate that cash can enhance firm value and such cash value is higher for Sharia-compliant firms than for Sharia non-compliant firms. In addition, cash is particularly valuable when national governance is strong. Furthermore, the positive effect of Sharia compliance on cash value is more pronounced when national governance is strong. Results suggest that internal governance (i.e., Sharia compliance) and external governance (i.e., national governance) should be in sync to maximize cash value.
Publisher
Humanities and Social Sciences Communications
Published On
Jan 19, 2023
Authors
Naiwei Chen, Min-Teh Yu
DOI
https://doi.org/10.1057/s41599-023-01521-4
Tags
Sharia compliance
national governance
corporate cash holdings
firm value
Organization of Islamic Cooperation

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