High Cash Holdings Of Listed Companies Behavior Motivation Research

The dicision of cash holding is pretty much important in corporate financial management. Cash assets have highly liquidity and the most stable value while it generates less income. On one hand, We can meet the need of our daily manufature, operation and investment,decease the probality of payment crisis,and promote the development of company with cash assets; It can make sure that devidend is paid enough and without any interruption, which can pass the active information about company to shareholders and increase the market price of stock.On the other hand, holding cash assets will generate much opportunity cost and lost the revenue of investment on other items.This behavior will do harm to fortune maximization of shareholders.So we need balance the level of cash holding. In the mordern economy society.cash holding is affected by all kinds factors such as capitial structure,profit margin and corporate govermance structure and becomes the output function. We want to find out what are the reasons of high level of cash holding? Agent theory or trade-off theory? So we can provide socientic suggestion for listed companies.The paper is based on listed companies about manufacturing from 2003 to 2005 in Shanghai and Shenzhen in China. We difine what is high level of cash holding, divide the stylebook into two parts, and design the relative factors which may have affect on cash holding. These factors are designed from such angle as cash accumulation, exterior financing, and so on. We try to find out the relatity between these factors and cash holding. Then we compare our theory result with the actual data of stylebook and describe the company character of high level cash holding. We believe these characters may be reasons of such behavior.