Some Listed Companies In China High Cash Holdings Phenomenon

Cash holdings is an important aspect of a corporate's financial management policy,cash is the most liquid asset and is the lowest profitable asset, large holdings of cash are explained in many ways including balance theory and agency cost theory by the theorists.Our countury's academic researches in this field are few, but in fact,there are some companies which hold a lot of cash in our countury. This paper takes balance theory and agency cost theory as the main basic theory to research our country's listed companies which hold the large cash, and mainly discusses the large cash holdings company's characteristics,cash holdings' motives and its impact to the company's performance.This paper's research method includes theory rearch and empirical research. After having a summary of the relevant theories about the cash holdings, this paper proposes theoretical explanation for some company's large cash holdings which may be suitable for our countury's actual situation firstly, including financial factors and corporate governance factors .Then,this paper define the large holdings of cash and analysis the large cash holdings company's characteristics, discovers that the central state-owned enterprises and certain industry's enterprises have stronger tendency to holding a lot of cash, in the same time, these companies are relatively smaller ,have lower debt rate and cash flow, and their performances are not weaker than the whole listed companies. As the major part of the paper,this study has a empirical research to the large cash holdings' motives and its impact to the company's performance. According to the research conclusions, we find that a company's cash substitutes and bank borrowings situations have an important implications for the large cash holdings, it is determined by a corporate's conservative asset management structure and financing structure, and the principal-agent problem doesn't have a big impact to the company's cash holdings. For the company's performance,large cash holding doesn't have an adversely affect to it,but cash holding only have a weak explanation capacity to the performance. Generally speaking, the empirical results support morely the balance theory's related interpretation to the large cash holdings.