Analysis of the Impact of CEO Power and Internal Control Synergy on Cash Holdings: Structural Equation Model and Path Analysis

Abstract

CEO power refers to a chief executive officer's (CEO) internal authority and influence. Making vital industry choices, deciding on the company's direction, administrating other supervisory, and monitoring development strategies are all part of the CEO's influence. The study aims to examine the relationship between CEO authority and cash holding. In this investigation, we gathered monetary data. Through data compilation, the study could utilize SEM-PLS to examine how CEO power and interior management synergy, two independent factors, impact cash holdings' dependent factors. The outcomes show that CEO power influence has a substantial consequence on money holdings, with more influential CEOs often gathering better cash treasury. Efficient interior controls, on the other hand, can either decrease or enlarge the CEO's influence in this association. Cash holdings were indirectly impacted by CEO power through financial regulations and investment possibilities. This suggests that strong CEOs can chase more insistent speculation strategies while adopting traditional monetary strategies, which consequences in better cash funds. The study also exposed a communication crash between interior management synergy and CEO power, highlighting that robust internal control can lessen influential CEOs' tendency to gather large cash funds, resulting in supplementary efficient cash management measures within businesses.