The Empirical Research Of Cash Holdings Of Companies Listed On The SMEs Board

In accordance with two major theories namely the trade off theory and the pecking order theory, this paper regarded 34 mechanizing enterprises listed on the small and medium-sized enterprises board of Shenzhen as samples, integrated real situation in this regard and conducted empirical tests for their cash holdings.First of all, this paper operated descriptive statistics to study the situation of both cash holdings of sample enterprises and independent variable, and consequently compared the differences before and after the enterprise-listing behavior through time series analysis. The finding showed that companies listed on the small and medium-sized enterprises board had relatively high cash holdings, while the average cash holdings of listed companies were higher than that of unlisted. Secondly, this paper utilized the simple linear regression model and empirical research to achieve the conclusion that companies listed on the small and medium-sized enterprises board had target cash holdings. Thirdly, through single factor analysis of variance and the establishment of multi-linear regression model, this paper regarded the market-to-book ratio, corporate size, financial leverage, bank debt, cash substitutes and short-term debt as significant factors affecting the cash holdings of enterprises. Among them, the market-to-book ratio and short-term debt beard a positive relationship with the cash holdings, while the other four factors beard a negative correlation with it. In light of the relationship between corporate size and cash holdings, this paper integrated the existence of target cash holdings so as to reach the conclusion that the cash-holding behavior of companies listed on the small and medium-sized enterprises board were more favorably explained by the trade off theory. Lastly, with regard to the overall situation of relatively high cash holdings of companies listed on the small and medium-sized enterprises board, this paper studied the influence on enterprises'profitability, financing, investment by high cash holdings. The finding showed that negative impacts on profitability made by high cash holdings existed to some extents; and enterprises with high cash holdings could take advantage of the merger and acquisition so as to abuse the cash flow.