Universal Journal of Accounting and Finance 9(4): 594-603, 2021 http://www.hrpub.org DOI: 10.13189/ujaf.2021.090407 Corporate Governance's Policy on the Impact of Cash Holding in Indonesia Anisa Kusumawardani 1 , Rizky Yudaruddin 1,* , Yanzil Azizi Yudaruddin 2 1 Faculty of Economics and Business, Mulawarman University, Indonesia 2 Faculty of Economics and Business, Balikpapan University, Indonesia Received May 14, 2021; Revised June 28, 2021; Accepted July 19, 2021 Cite This Paper in the following Citation Styles (a): [1] Anisa Kusumawardani, Rizky Yudaruddin, Yanzil Azizi Yudaruddin , "Corporate Governance’s Policy on the Impact of Cash Holding in Indonesia" Universal Journal of Accounting and Finance, Vol. 9, No. 4, pp. 594-603, 2021. DOI: 10.13189/ujaf.2021.090407. (b): Anisa Kusumawardani, Rizky Yudaruddin, Yanzil Azizi Yudaruddin (2021). Corporate Governance’s Policy on the Impact of Cash Holding in Indonesia. Universal Journal of Accounting and Finance, 9(4), 594-603. DOI: 10.13189/ujaf.2021.090407. Copyright©2021 by authors, all rights reserved. Authors agree that this article remains permanently open access under the terms of the Creative Commons Attribution License 4.0 International License Abstract The Asian Financial Crisis in 1997 and various other scandals in large companies in Indonesia led to the emergence of good corporate governance (GCG). Regulators on the capital markets understand that good corporate governance promotes transparency and improves the quality of financial reporting, including cash management, responsibly. Furthermore, high cash levels lead managers to misuse the fund for personal gain, because the assets under their supervision increase thereby. This research analyzes the effect of corporate governance, such as board size, and independence on cash holding in Indonesia. Data were obtained from 373 firms in seven industries publicly tabulated on Indonesia Stock Exchanges (IDX) from 2008-2017 and 2,742 firm-year observations. The obtained data were analyzed using Common, Fixed, and Random Effects Models. The result showed that the total number of the board of directors, is positively and significantly proportional to Board Size thereby increasing the company holds cash. Meanwhile, the other corporate governance variable, known as Board Independence, is insignificant in any three models. The result also showed positive coefficients of board size on cash holding (CASH) in companies with and without CEO duality. The result further showed that the independent board had a significant and negative impact on cash holding (CASH), which is more pronounced in companies with CEO duality and used to strengthen corporate governance. The results have specific policy implications like the importance of corporate governance, in particular the role of the Board of Directors in the effective supervision of managers and transparency of enterprises. Keywords Corporate Governance, Board Size, Board Independent, Cash Holding 1. Introduction The topic of corporate governance and cash holding policy is investigated in this article. In Agency Theory [1], the head of the management or decision-making authority referred to as the company manager has broader access to internal information and prospects than the owner. However, this condition causes information asymmetry. In other words, it is described as a condition that reflects the imbalance of data acquisition between the providers of information as managers and the stakeholders as users. Subsequently, assuming both parties are not concerned with their personal interests, then it is ensured that the actions taken by the manager are not always based on the well-being of the owner. Therefore, the manager is limited by monitoring the designed costs and activities. Meanwhile, previous empirical studies further reported the important act of corporate governance in cash holding policy. [2], [3], [4], [5] and [6] reported the presence of an agency motive associated with cash holding. This implies that cash has no value in a country with enormous agency