Our study investigates how CEO-friendly boards influence the value and utilization of cash resources. In this paper, we analyze two conflicting views on CEO-friendly boards and their impact on corporate cash holdings: one view posits that such boards might be too lenient, fostering managerial moral hazard problem, while the other contends that they encourage CEOs to share information, despite CEOs knowing that better-informed boards could enforce stricter oversight. By measuring board friendliness through CEO-board social ties, we find that firms with a friendly board tend to maintain lower cash reserves but their excess cash is valued higher by the market compared to firms without such a board. Moreover, these boards deploy excess cash in ways that significantly enhance firm value. The results remain robust even after controlling for various governance variables and CEO characteristics. Our findings offer crucial insights for corporate practitioners and policymakers, highlighting the importance of appointing and retaining CEO-friendly directors to foster effective information exchange, especially in firms with substantial CEO-board information asymmetry in capital budgeting.

中文翻译：

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对首席执行官友好的董事会与现金持有价值之间的关系

我们的研究调查了对首席执行官友好的董事会如何影响现金资源的价值和利用。在本文中，我们分析了关于首席执行官友好型董事会及其对公司现金持有量的影响的两种相互冲突的观点：一种观点认为此类董事会可能过于宽松，从而引发管理道德风险问题，而另一种观点则认为它们鼓励首席执行官分享信息，尽管首席执行官们知道消息灵通的董事会可以实施更严格的监督。通过通过首席执行官与董事会的社会关系来衡量董事会的友好程度，我们发现，与没有这样的董事会的公司相比，拥有友好董事会的公司往往保持较低的现金储备，但其多余现金的市场估值更高。此外，这些董事会以显着提高公司价值的方式部署多余的现金。即使在控制了各种治理变量和首席执行官特征之后，结果仍然稳健。我们的研究结果为企业从业者和政策制定者提供了重要的见解，强调了任命和保留对首席执行官友好的董事以促进有效的信息交流的重要性，特别是在资本预算方面首席执行官与董事会信息不对称的公司中。