The value of excess cash, expropriation incentives, and corporate governance

This study explores the impact of controlling shareholders' expropriation incentives on the relationship between excess cash and firm value within business groups. Through an examination of ownership disparity, we identify a significant negative link between ownership disparity and the value of excess cash. Notably, robust corporate governance mitigates this association, with the audit system and shareholder profit sharing emerging as pivotal protective components. Our findings underscore the susceptibility of excess cash to expropriation while highlighting the role of effective corporate governance in monitoring self-interested behaviors of controlling shareholders.