Corporate Cash Holdings: An Empirical Investigation Of China Public Companies

Usually the cash holding level in China's listed companies is higher than other countries'.The purpose of this paper is to find out why China's listed companies hold so much cash through empirical analysis and theoretical analysis.This paper summarized the previous theories.The variables were set based on the cost of capital and capital structure theory,financing hierarchy theory, the balance theory and the financial analysis theory. We also considered China's listed companies governance features and capital market characteristics in set these variables. The data were selected from financial statements of China's listed companies. In this paper we did descriptive statistical analysis,the correlation analysis,the factor analysis and finally the regression analysis for enterprises cash holding,enterprise growth ratio,enterprise cash flow,enterprise scale, financial leverage,the size of the board, dividend payment rate, sales net profit margin and the enterprise bank loan-debt ratio.Our empirical results were analyzed in the end. Our research found that enterprise growth ratio and enterprise cash holding has significant positive correlation. Enterprise scale and enterprise cash holding has significant negative correlation. Enterprise cash flow and enterprise cash holding has significant negative correlation. Sales net profit margin and enterprise cash holding has significant negative correlation. Enterprise dividend payments ratio and enterprise cash holding has significant positive correlation. The enterprise bank loan-debt ratio and the enterprise has a negative correlation. Independent directors scale and enterprise cash holding has a negative correlation. The size of the board and enterprise cash holding has a negative correlation.