Behavior Analysis Of Cash Holdings Of Chinese Listed Companies

Cash holdings policy is an important company's financial decisions. It not only reflects thecompany's overall financial and business strategy, closely relates to macro-institutional environmentand economic consequences of cash holdings. Investors are most concerned that the economicconsequence of cash holdings is the "value creation" or "value destruction".In this paper, combined with the research background of cash holdings of listed companies andrelated empirical studies,We export research topics. Chapter II review systematically the theory ofcash holdings. The third chapter analyzes the institutional background and current situation of cashholdings of Chinese listed companies. From Chapter4to Chapter6for the main part of the paper,The main topics are financing constraints and cash holdings, financing constraints and dynamicadjustment of cash holdings and financial constraints and the value of cash holdings, where is thefocus of this study.Finally, the paper summarizes the conclusions and inspiration, and point out theresearch limitations and future research directions.Findings of this study and innovation are the following:First of all, Under Financing constraints,we test empirically behavior of firms cash holdingsbased on firms size, whether the group, nature of ultimate controller, level of development offinancial markets, level of development of the internal market. The results show that financingconstraints affect the behavior of internal cash holdings. Not perfectly competitive market makesfirms face financing constraints,for those firms with financing constraints, the proportion of cashholdings relies systematically on internal cash flow,however,firms with soft budget constraint,corporate cash holdings and internal cash flow is not necessarily linked.Secondly, combined with financing constraints theory, we propose the optimal cash holdingsdynamic adjustment hypothesis and find that compared to non-financing constraints, financingconstraints company adjust cash holdings faster to the target level and the adjustment process withasymmetric features, which as companies significantly biased towards the target under the level ofcash holdings,it adjust faster, contrast, adjust more slowly. Meanwhile, there is slow time-varying,resulting in Chinese listed companies continuous one-way adjustment, which is different fromwave-type adjustment around the optimal value.At last, Under Financing constraints,we test the substitutes for intra-group credit and bank loansand their impact on the value of cash holdings.The results show that bank loans and intra-groupcredit are alternative. Given Chinese underdeveloped capital market and imperfect banking reform,The use of fund obtained by bank is low efficient,because of the special information and controladvantages,the credit funds gotten by intra-group can compensate the lack of capital marketdevelopment.The conclusion shows that financing constraints is an important factor in firm's cash holdings.In the case of underdeveloped financial markets, financing and capital supply are limited,which willincrease transaction costs between external market and firms, companies will prefer to internal cashholdings as an important forms of financing.This article enriches financing constraint's empirical evidence according to cash holdings andits economic consequences...