Research On The Relationship Between Shareholding Structure And Cash Holdings

Cash holdings is an important liquid asset of a corporate, corporate cash holdings is for daily transactions, business activities, investments, dividend payout and so on, in a word, behavior of cash holdings reflects the company's financial decision-making and business investment strategies, and is also closely related to corporate governance. So, what factors affect cash holdings, how to make cash holdings decision more rational? It is the article to answer the questions.In the empirical researches, some research findings and conclusions of influencing factors on the cash holdings are similar with ones abroad, but because of China's special capital markets and corporate governance, influencing factors on the level of cash holdings of China's listed companies are special. On the basis of having reading lots of documents, my research began from the fact that China's listed companies widely held high cash, and analyzed how the various variables (shares concentration,state-owned shares ratio, influced A shares ratio) of the ownership structure influence the level of cash holdings.I also introduced non-corporate governance factors to study how they influenced the level of cash holdings. The samples number of A-share listed companies in China is 1958, the empirical tests were for the year from 2006 to 2008. Through empirical testing I come to the followings: shares concentration is positive to cash holdings,state-owned shares ratio is positive to cash holdings.Research results indicated that degree of equity concentration is high, large shareholders occupied the interests of small shareholders through related party transactions; that in order to achieve their own political and economic interests, the state-owned shareholders may control the cash holdings at the cost of the interests of the company;that lack of a wide range of participants in A share market, not flowing of equity, voting with their feet mechanism is not perfect, A share market can not supervise managers and large shareholders.For the irrational shareholding structure of China, this paper presents how to optimize ownership structure, improve corporate governance to make better decisions of cash holdings and improve the efficient use of cash assets.