We examine the relation between cash holdings, quality of governance and financial constraints. We find that firms with strong shareholder rights hold more cash, contrary to the predictions of agency theory. This result is partly due to the positive correlation that exists between governance...

We examine the relation between cash holdings, corporate governance and financial constraints. We find that firms with weak shareholder rights hold less cash, in contrast to the predictions of agency theory. This result is partly due to the positive correlation that exists between shareholder...