Evaluation of systematic risk, corporate governance, and cash holdings: evidence from Indonesia

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Profits that are calculated to finance unexpected cash need expedite management. This paper investigates the effect of corporate governance on cash holdings with systematic risk as a moderating variable. The population consists of companies from the property and real estate sectors listed on the Indonesia Stock Exchange (IDX) during 2012–2020. Through the purposive sampling technique, the sample obtained 41 companies as the study object. Data analysis is focused on panel data and its interpretation through the Moderated Regression Analysis (MRA). Hypothesis testing uses statistical terms at the 5% probability level. Important findings underline that corporate governance has a positive significant effect on cash holdings, while systematic risk has a negative insignificant effect. On the other hand, the moderation between corporate governance and cash holdings through systematic risk is positive significant. Systematic risk reflects the reliability of a stock; when the risk is higher, it tends to increase in cash flow situations, and investors prefer high-risk investments with the expectation of profit from returns. It is hoped that future contributions will serve as reference material for academics, government, and companies engaged in the financial service sector.

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    • Figure 1. Framework
    • Figure 2. Cash holding average value of property and real estate sample companies in IDX
    • Figure 3. Corporate governance average value of property and real estate sample companies in IDX
    • Figure 4. Systematic risk average value of property and real estate sample companies in IDX
    • Figure 5. Moderation average value of property and real estate sample companies in IDX
    • Table 1. Sample criteria based on a purposive sampling technic
    • Table 2. Estimated of variables
    • Table 3. Review of descriptive statistics (n = 369)
    • Table 4. Data panel regression analysis
    • Data curation
      Musdalifah Azis
    • Methodology
      Musdalifah Azis
    • Writing – original draft
      Musdalifah Azis, Dio Caisar Darma
    • Conceptualization
      Michael Hadjaat
    • Formal Analysis
      Michael Hadjaat
    • Investigation
      Michael Hadjaat
    • Resources
      Michael Hadjaat
    • Supervision
      Michael Hadjaat
    • Project administration
      Rositawati
    • Software
      Rositawati
    • Validation
      Rositawati
    • Writing – review & editing
      Rositawati, Dio Caisar Darma
    • Funding acquisition
      Dio Caisar Darma
    • Visualization
      Dio Caisar Darma