China's Listed Companies Holding Cash In The Empirical Study Of Influencing Factors

Cash holding is an important theoretical and empirical issue in modern corporate financial management. Corporate cash holding is relating to corporate normal operation, growth and development as well as corporate financial behaviour like investment, fund raising and dividend distribution, etc. Foreign researcher started their cash holding research from1998(Kim et al ), 1999(Opler et al). They investigated cash holding decision and determinants in respective of deep economics theory and financial theory and developed related theories including static balance theory, information asymmetries, agency cost theory and financing hierarchy theory. In empirical study, they found evidence that corporate characteristics (cash flow, size, debt structure, bank debt, growth opportunities etc) have an impact on cash holding. But the determinants among different countries differ from each other because of their capital market, governance structure and economic policy etc. Compared with these, only two paper initiated cash holding determinates in china.This paper investigates the empirical determinants of corporate cash holdings for a sample of publicly traded China firms in the 2000-2004 periord. The study divides the cask holding determinants into corporate financial factors and governance characteristics factor and focuses on ownership structure and related governance factors. The results reveal that firm's leverage, bank debt, liquidity, structure have a significant negative correlation. Providing cash dividend, debt structure, cash flow have a significant positive correlation. In terms of governance characteristics, this paper observes that that they have an important effect on cash holding. Firstly, the study presents evidence of a significant non-monotonic relation between controlling shareholder and cash holding; secondly, according to current ownership division , State share has a significant impact on cash holding and legal person share has an positive impact on cash holding, but not statistically significant. Also, the relation ship between A floating share and cash holding is significant positive. Thirdly, share protection has an positive effect on cash holding, both of which are not consistent toexpectation. Fourthly, board characteristics including board size, independent director ratio etc don't have a significant effect on cash holding. Finally, this paper divides ownership structure according to share ownership property and finds that final state-owned share have a significant non-monotonic relation with cash holding. Besides, common legal person share has a negative effect on cash holding, but not statistically significant.