Moderating Effect of CEO Tenure and Managerial Experience on Firm Specific Determinants of Corporate Cash Holdings

International Journal of Economics and Management Studies

© 2015 by SSRG - IJEMS Journal

Volume 2 Issue 4

Year of Publication : 2015

Authors : Samuel Nduati Kariuki, Prof. Gregory S. Namusonge, Dr. George O. Orwa

10.14445/23939125/IJEMS-V2I2P106

How to Cite?

Samuel Nduati Kariuki, Prof. Gregory S. Namusonge, Dr. George O. Orwa, "Moderating Effect of CEO Tenure and Managerial Experience on Firm Specific Determinants of Corporate Cash Holdings," SSRG International Journal of Economics and Management Studies, vol. 2,  no. 4, pp. 8-13, 2015. Crossref, https://doi.org/10.14445/23939125/IJEMS-V2I2P106

Abstract:

The study examines the moderating effect of CEO tenure and managerial experience on firm specific determinants of corporate cash holdings among private manufacturing firms in Kenya. The research employed the upper echelons theory to identify CEO characteristics that are linked to various organizational processes and outcomes such as cash holding. This survey-based study selected a sample of 156 private manufacturing firms from the firms registered with the KAM that are located in Nairobi and surrounding area using stratified random sampling technique. The research collected primary data using selfadministered questionnaires to gather self-reported financial measures from the CFOs. The study employed stepwise multiple regression analysis to determine the moderating effect of CEO tenure and managerial experience on independent and dependent variables. The study concludes that the CEO tenure significantly moderates firm size, growth opportunities, and likelihood of financial distress as determinants of corporate cash holdings. Further, the study concludes that CEO managerial experience in other industries significantly moderates firm size and cash flow volatility determinants of corporate cash holdings among private manufacturing firms in Kenya.

Keywords:

Cash holdings, CEO managerial experience, CEO tenure, Upper echelons theory

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