An Empirical Research On The Effect Of China's Listed Companies' Investment Characteristics On Cash Holding Level Under Large Shareholder's Controlling

Cash is a crucial financial resource for the enterprises, which can exert great impact on the management, investment, fund-raising of the enterprises, and is close correlated with the enterprises'operating performance. Analyzing the advantages and disadvantages of cash holding and determining the proper cash holding amount is important in financial management, which also reflects the corporate financial strategy and governance generally.Firstly, recent research on the influential factors of cash holding and its relationship with investment is reviewed. Secondly, based on the static tradeoff theory, information asymmetrical theory and the theory of agent, the issue of corporate cash holding and analyses its relationship with investment is analyzed theoretically. Then the model of the influential factors about the listed corporate cash holding is set up combined with the financial and governance features of listed corporations in China.Furthermore,619 listed corporations'data from 2001 to 2007 are chosen to make empirical studies. Factors like cooperation size,cash flow,Liq,Lev,Debt have negative correlation with cash holding, while factors like firm's growth, debt structure, ratio of share A have positive correlation with cash holding. In addition, board characters have no effect on cash holding.From above this dissertation estimates the excess cash holding of sample corporations in the year of 2001 to 2007and set up a model that reflects the influence of the excessive cash holding on the investment under large shareholders'control. The results reveal that the excess cash holding has a significant positive correlation with performance. That is to say, more cash holding will lead to larger investment. Meanwhile, sample grouped by the ultimate controlling shareholders, we found that state-owned enterprises are in cash agent problems, lack of business owners on the basis of the ownership structure, more inclined to put idle cash to expand investment to maximize personal gains , and relative, private enterprises because of its ownership structure and its property rights attributable to the individual, they are more inclined to profit-oriented and therefore more cautious in terms of investment, so there is no significant correlation between cash holding and investment. Finally, by the group of the largest shareholder's share proportion ,it shows that at a lower or a higher proportion of the largest shareholder's share, cash and investment is also less sensitive, and in the middle part of the shares on the proportion, the relation between cash and investment is more strong.At the final part of this paper, we integrated our case study and the reality of the listed companies in China to tentatively propose some suggestions on improves ownership characteristics and the external market environment.