Empirical Research On Cash Holdings Of Our Listed Companies Based On Financial Constrains

Cash holdings.which is relating to corporate normal operation, growth and development as well as corporate financial behavior like investment, fund raising and dividend, etc is an important theoretical and empirical issue in modern corporate financial management. In addition, cash holdings has also close relation to corporate governance. Western scholars had started their cash holdings research from the different point of views, and presented some cash holdings theories, including static tradeoff theory, asymmetry theory, agency cost theory and financing hierarchy theory. In empirical study, they found evidences that corporate characteristics have an impact on cash holdings, but the determinants among different countries differed from each other because of their capital markets, governance structures and economic policies etc. Compared with western scholars'researching on this problem, there is few studies on cash holdings issue in depth and multi-angle.This paper sets up the comprehensive index sign to measure the degree of financial Constrains of the listed companies, based on comprehended the concept of financial constrains thoroughly; After reviewing and tiding up all the effects of theories of cash holdings, carries on the effects of financial constrains theory to cash holdings. On the aspect of empirical study, this paper collects the 4920 Panel Danas of 820 listed companies in the stocks of shanghai and Shenzhen during the 2001-2006 period, taking the cash holdings of listed companies as dependent, based on categorizing the listed companies according to the comprehensive index sign of financial constrains, investigates the effects of the degree of financial constrains to the cash holdings of our listed companies, through all kinds of statistics, and explains the phenomenon of rack cash holdings of our listed companies with the theories of financial constrains and agency.The results reveal that:The financial constrains theory can be used to explain the phenomenon of cash holdings of our listed companies. The proportion of cash holdings of weaker financial constrains companies is especially higher, because of managerial and majority shareholder's self-interests. We suggest that the higher financial constrains companies should improve their. financial status and the weaker financial constrains companies should reform their corporate governance,recede their agency costs and avoid the behaviors of over-investment.