Research On Cash Holdings Competition Effect Of Chinese Listed Company

In recent years, The company cash holdings level both at home and abroad hasremained at a high level,this phenomenon give rise to Practice and academics moreand more attention. Scholars on the basis of study of the influence factor of cashholdings, Combining the theory of financing constraints and agency theory to explorethe economic consequences of a cash holdings, formed the cash value is higher andthe lower two opposite views.How to measure and evaluate the value of corporatecash holdings has become an important problem which academia and practice circlepay close attention to, especially under the background of the global financial crisis in2007, some companies with abundant cash in product market competition haveoutstanding performance, prompting scholars begin to pay close attention to corporatecash holdings in the role of product market competition.Predation theory considercompany cash holdings has the competition effect, abundant cash holdings of thecompany by means of the implementation of product market competition strategy orbetter on the rivals, credible deterrent effect, can take advantage in the product marketcompetition.The key of the Corporate cash holding competition effect due to thepresence of financing constraints, company nature of property rights, industrycompetition situation and monetary policy will affect the company’s financingconstraints, thus affecting the company cash holdings of competition effect, but theeffect of corporate cash holdings competition still lack of systematic study, further,the implementation of corporate cash holdings competition effect channel and itseconomic consequences are not clear.Based on the background of our country, combining with the financingconstraints, property rights and monetary policy examined the corporate cash holdingscompetition effect, and from the Angle of the company’s R&D verify the cashholdings competition effect channels and its economic consequences. Study foundthat:(1) the company hold enough cash to help win the product market competitiveadvantage, the company cash holdings has the competition effect, and the companythe more serious the degree of financing constraints, the competition effect of cashholdings more significantly;(2) industry competition situation to strengthen thecompetition effect of corporate cash holdings, the more intense competition in theindustry the company cash are more likely to get the product market competitiveadvantage, and the more serious financing constraint the company will furtherstrengthen the industry competition effect of the positive role of corporate cash holdings competition;(3) the different nature of property rights of company casheffects of competition there is a difference, compared with the state-owned enterprises,private enterprises cash can win more market competitive advantage, and in moreserious financing constraint of private enterprises, the company cash holdingscompetition effect is more significant; In the nature of property rights in the processof the deep discussion we also found that credit discrimination will strengthen thecompany cash holdings of private enterprises competition effect, while privatecompanies to establish a link between political will weaken the competition effect ofcash holdings; State-owned enterprises obtain the high government subsidy funds andstate-owned companies executive compensation control will reduce the competitioneffect of corporate cash holdings;(4) monetary policy impact on corporate cashholdings competition effect is that, compared with the loose monetary policy, thecompany cash holdings under the tight monetary policy competition effect is moresignificant, and under the tight monetary policy, financing constraints and privateenterprises through cash won the product market competitive advantage is moreimportant; Tighter monetary policy causes a decline in the money supply andincreasing the difficulty of credit access, on the whole led to lower corporate cashholdings, but the company will accelerate when tightening monetary policy to adjustthe level of cash holdings, to ensure enough cash levels, thus win the marketcompetitive advantage;(5)R&D is the important channels of realizing corporate cashholdings competition effect, namely the company through cash can increase theintensity of R&D and R&D steadily, and won the product market competition;(6) thecompany cash holdings competition effect helps to increase the marginal value ofcash holdings, the company holding cash helps to win the competitive advantage inthe product market, which was beneficial to the improvement of the value of thecompany.The implications of this article is: First, cash as the most liquid assets can win theproduct market competitive advantage for the company to provide importantguarantee, so the enterprises should strengthen the management of cash, and from theperspective of corporate strategy attaches great importance to the importance of cashholdings; Secondly, our country private enterprise credit discrimination andcorporation with the government to establish a link between politics, state-ownedenterprises enjoy high fiscal subsidies and state compensation control wait for aphenomenon, which can lead to different degree of property rights of enterprisesfinancing constraints, leading to its cash in product market competition, the effect isdifferent, we should further promote the reform of state-owned enterprises for thedevelopment of enterprises of different ownership to create more fair market competition environment at the same time, also want to establish a fair market rulesfrom the system. Thirdly, we for macro monetary policy impact on microcosmicindividual provides empirical evidence, for macroeconomic policy makers need tofocus on macroeconomic policy’s impact on individuals, in the respect of macropolicy of regulation to the national economy at the same time, guarantee the stabilityof macroeconomic policies. Finally, cash holdings can increase the company’s R&Dand keep sustainable, provide intrinsic motivation for the company in product marketcompetition, eventually to improve the value of the company. Therefore, we shouldattach great importance to the rational allocation of financial resources, consideringthe cash holding costs at the same time, keeping a good liquidity.