| Corporate cash holdings include the cash and the marketable securities,which plays an important role for firms in terms of investment and financing policies.Since 1990 s,corporate cash holdings experienced a remarkable increase.From 1980 to 2006,the average cash-to-assets ratio of American listed firms increased by 0.46% every year,from10.5% on 1980 to 23.3% on 2016.Like the U.S,the cash holdings of Chines listed firms also experienced significant growth after 2000.Those facts attract substantial academic attention,and corporate cash holdings become one of the most important topics in corporate finance.The main motives of the increase of cash holdings come from the agency problems and the uncertainty faced by firms,and excess cash holdings may also lead to underinvestment problems.Thus,the study of the impact factors of cash holdings has great implications to mitigate the problems of internal agency conflicts and underinvestment.A large number of studies investigate the impact of macroeconomic factors,especially the impact of institutional development on cash holdings.However,no consensus has been achieved on the mechanism of the impact of institutional development.In addition,the development of institutions provides remarkable change to market competition,but there still are a number of State-owned companies and low market competition in a few industries because of Chinese specific environment,which leads to substantial difference in terms of market competition.The impact of market competition has been ignored in current literature,the industrial difference in market competition has not been fully analyzed as well.Meanwhile,the impact of uncertainty on cash holdings is based on the factors inside the companies and the macroeconomic factors,however,the uncertainty from international market has been neglected,especially the impact of the uncertainty from international energy market on macroeconomy and corporate investment and financing policies.Based on the analysis above,following the writing logic of “basic research—empirical research—policy mechanism and countermeasures”,with the sample of Chinese listed firms,applying panel data fixed effect models,this paper studies the financial constraint mitigation effect of institutional development and the moderating effect on grabbing hand phenomenon,and this paper also analyzes the impact of oil price uncertainty.This paper includes seven chapters.The first chapter is introduction,the second chapter presents the literature review,the third chapter analyzes the impact of institutional development on cash holdings,the fourth chapter studies the impact of market competition on cash holdings,the fifth chapter tests the moderating effect of institutional development on grabbing hand phenomenon,the sixth chapter investigates the impact of oil price uncertainty on cash holdings,the seventh chapter presents conclusion and policy implications.The main work of this paper is listed below:First of all,this paper reexamines the impact of institutional development on corporate cash holdings.Empirical results reveal that,the impact of institutional development on corporate cash holdings cannot be explained by grabbing hand effect,and the financial constraint mitigation effect is the main factor.Meanwhile,our findings also show that the relationship between institutional development and cash holdings exhibits an inverted U-shape.When institutions are less developed,due to the lack of supervision and punishment,corruption increases,firms will hold more cash to pursue their own political benefits.When institutions are more developed,with the establishment of supervision and punishment,corruption decreases.Financial constraint mitigation effect dominates,then,cash holdings decrease with institutional development.In addition,this impact is less important for state-owned companies and large firms.Second,this paper studies the impact of market competition.Our empirical results show that the relationship between market competition and cash holdings is nonlinear.Corporate investment increases with market competition when the latter is relatively low,then,cash holdings will decrease.Then,corporate investment decreases with market competition when the latter is relatively high,thus,cash holdings will increase.Meanwhile,the results from quantile regression show that,with the increase of cash holdings,the impact of market competition tends to increase.Furthermore,this impact is mitigated for state-owned companies,meanwhile,firms with larger total assets are also less impacted.Third,this paper verifies the moderating effect of institutional development on the relationship between political uncertainty and cash holdings.With the measure of political uncertainty,this paper verifies the existence of grabbing hand effect,firms will hold less cash because of grabbing hand effect.In addition,this paper further investigates the moderating effect of institutional development on grabbing hand phenomenon.With the development of institutions,the power of officials is shrunk,the entry of industries is less regulated,the intervention of governments on markets and firms has been largely reduced.Hence,the grabbing hand effect will be attenuated with the development of institutions.Moreover,the moderating effect of institutional development is significant for Non-State-Owned enterprises because SOEs are less impacted by grabbing hand effect.Finally,this effect is higher for smaller firms.Finally,this paper theoretically analyzes and empirically tests the impact mechanism of oil price uncertainty on cash holdings.Combining real options theory and pecking order theory,this study builds the link among oil price uncertainty,corporate investment and cash holdings.Our empirical results show that,when oil price uncertainty is relatively low,the value of waiting options is higher,then,firms tend to reduce investment and accumulate cash.When oil price uncertainty is higher,the value of growth options is higher,then firms tend to increase investment and reduce cash.Moreover,we find that the effect of oil price uncertainty is mitigated as the market value of firms increases.Meanwhile,state-owned companies are less impacted by oil price uncertainty. |
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