The impact of accounting conservatism on cash holdings: The moderating role of board independence in SBF 120 French listed companies

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Abstract

The objective of this paper is to identify the relationship between accounting conservatism and cash holdings and to include the moderating effect of board independence in this relationship. The study is based on a sample of 100 French companies listed on the SBF 120 Index. The sample includes 1000 firm-year observations for the period of 2010–2019. The analysis employs quantitative methods to examine the effects of accounting conservatism on cash holdings, considering the role of independent board members as a moderating variable. The data were collected from the DataStream database and the annual reports of the firms listed on the SBF 120 Index. The results indicate a positive and significant impact of accounting conservatism on cash holdings. Moreover, the presence of independent board members strengthens this relationship, suggesting that board independence plays a crucial role in enhancing the impact of accounting conservatism on liquidity management. This study contributes to the literature by demonstrating the importance of accounting conservatism in influencing corporate liquidity. It also offers new insights into the moderating role of board independence, which strengthens the relationship between conservatism and cash holdings, especially in the context of French listed companies. Furthermore, the study provides practical recommendations for integrating this conservative approach into corporate cash management strategies by highlighting the impact of board structure on corporate financial management.

Keywords: Cash Holdings, Accounting Conservatism, Board Independence, French Listed Companies, Corporate Governance

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: M41

Received: 22.10.2024
Accepted: 24.02.2025
Published online: 26.02.2025

How to cite this paper: Chaieb, S. (2025). The impact of accounting conservatism on cash holdings: The moderating role of board independence in SBF 120 French listed companies. Corporate Ownership & Control, 22(1), 80–91. https://doi.org/10.22495/cocv22i1art6