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<p>This study explores how judicial efficiency and creditor rights affect corporate cash holdings in firms with complex ownership structures, particularly those organized under pyramidal arrangements. Using quartile regression, we examine firms in South Asia, East Asia, and Latin America to assess how these legal factors shape financial decisions across different levels of internal complexity. Our findings show that the legal environment plays a critical role in determining cash-holding behavior. Pyramidal firms, with their layered control structures, tend to hold more cash than stand-alone firms, largely due to the influence of ultimate owners. Judicial efficiency and creditor rights have stronger effects on these firms, especially at higher quartiles of leverage. We also find that judicial efficiency moderates cash holdings: efficient courts reduce the cash reserves of highly complex pyramidal firms more than those of stand-alone firms. By highlighting the interaction between legal institutions and ownership structures, this study adds to the debate on corporate governance in emerging markets and shows how institutional frameworks shape financial strategies.</p>

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The interplay of judicial efficiency and ownership structure: implications for cash holdings in pyramidal firms in emerging economies

  • 期刊论文

  • 发表日期：

    2026年2月17日

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  • Muhammad Hashim Shah,
  • Zuoping Xiao,
  • Hizar Hayat Shah,
  • Abdullah,
  • Kamran Aamir,
  • Nimra

摘要

This study explores how judicial efficiency and creditor rights affect corporate cash holdings in firms with complex ownership structures, particularly those organized under pyramidal arrangements. Using quartile regression, we examine firms in South Asia, East Asia, and Latin America to assess how these legal factors shape financial decisions across different levels of internal complexity. Our findings show that the legal environment plays a critical role in determining cash-holding behavior. Pyramidal firms, with their layered control structures, tend to hold more cash than stand-alone firms, largely due to the influence of ultimate owners. Judicial efficiency and creditor rights have stronger effects on these firms, especially at higher quartiles of leverage. We also find that judicial efficiency moderates cash holdings: efficient courts reduce the cash reserves of highly complex pyramidal firms more than those of stand-alone firms. By highlighting the interaction between legal institutions and ownership structures, this study adds to the debate on corporate governance in emerging markets and shows how institutional frameworks shape financial strategies.