Studies On The Determinants For The Value Of Cash Holdings Of Listed Companies In China

The research of the behaviors of corporate cash holdings began from Keynes, who explained the motives of cash holdings, since then many scholars enriched and developed the research in this field, however, learning from the retrieved literate,the recent research focused on the amount of cash holdings but not cash value. As the most liquid asset of the company, cash is essential to operation security and operation efficiency. Cash value decides the amount of the cash holdings, and the research of the cash value can help companies improving cash management and making cash-hold strategy.This paper systematically analyzes the impact of various factors on cash value and clarifies the relation between the amount of cash and cash value, then chooses the Chinese A-share listed companies as samples to study the impact of financings and corporate governance on the value of corporate cash holdings. The paper classified the listed companies according to different criteria, founding that the amount of cash holdings in different group have significant differences, which indicates different factors have significant impact on cash holdings. Factors that affect the cash value can be divided into external factors and internal factors, all external factors affect the overall level of the cash value except financial constraints, while financing constraints and internal factors affect the individual level of cash value. Cash holdings and cash value have mutual influence which is non-linear, and the curve of cash value is convex in the two-dimensional figure. The spot of the highest value of cash holdings is the optimal amount of corporate cash holdings. Moreover, high cash value accompanies with low level of cash holdings, and vice versa.The paper constructs the index of financing constraints and corporate governance, and studies the impact of financing constraints and corporate governance on the cash value. The empirical results have showed that financial constrains significantly increases the cash value, and developed regions are better than developing regions, Moreover, corporate governance increases the value of the cash. The value of the cash which actually controlled by the state-owned hold is higher than that of non-state owned company. Financing constraints reduce the agency costs to some extent, so it improves the cash value of the company, but this affect is obviously passive. Strengthening corporate governance to improve cash value should be a wiser strategy. Therefore, company should improve the corporate governance as well as cash management to realize the maximization of corporate value.