Foreign Institutional Ownership and Cash Holdings in Thai Capital Market

Main Article Content

Wiroj Phaiboonvessawat
Yordying Thanatawee


This research article examines the relationship between foreign institutional ownership and the cash holdings of nonfinancial firms in Thailand over the period from 2013 to 2016. The result indicates that firms with higher foreign institutional ownership are associated with more cash holdings. This finding suggests that foreign institutional investors in the Thai firms may encourage managers to hold more cash reserves to hedge against unexpected cash flow risks and to increase value-enhancing investment opportunities with the precautionary savings motive. Moreover, this finding warns that firms with greater cash holdings will create agency problems between managers and shareholders, if managers dissipate such holdings for their private benefit and invest in value-decreasing investments. Managers and policy makers should improve corporate governance practices and provide institutions with effective capabilities for management monitoring roles to mitigate those conflicts of interest.

Article Details

Author Biographies

Wiroj Phaiboonvessawat

Doctoral Student, Graduate School of Commerce, Burapha University, 169 Longhadbangsaen Rd., Saen Suk, Mueang, Chon Buri 20131, Thailand

Yordying Thanatawee

Assistant Professor of Finance - Graduate School of Commerce, Burapha University, 169 Longhadbangsaen Rd., Saen Suk, Mueang, Chon Buri 20131


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