Do Descendant Board Chairs Influence Cash Holdings?

ABSTRACT This study examines how the educational background of descendant board chairs influences cash holding policies in Taiwanese family firms from 2000 to 2022. The findings indicate that companies led by highly educated descendant chairs maintain significantly lower cash reserves compared to other firms, supporting the notion that these leaders demonstrate greater tendencies for innovation and risk tolerance. Further analyses reveal that the negative relationship between descendant leadership and cash holdings becomes even more pronounced in firms characterised by substantial research and development (R&D) investments. Robustness checks validate these results, highlighting the crucial role of successor education in shaping the financial strategies of family‐controlled enterprises.