Cash Holdings Of Listed Companies In Southwest China And Its Relationship With The Business Performance

Cash is an important asset of the company, it is the most liquid, butprofitability is indeed the lowest in the asset. Therefore, cashmanagement is essential, and the management of cash holdings is a toppriority. The company’s cash holdings behavior is not only related to thecompany’s daily business activities, but also holding cash’sdecision-making is closely related to other financial decisions, such as thecompany’s capital structure, investment and financing decisions, dividendpolicy. it is a comprehensive reflection of the company’s financialstrategy and business strategy and closely related to the company’s ownfinancial characteristics, corporate governance and other factors, andaffects the company’s operating performance.The thesis on the basis of understanding for Research on theinfluencing factors and performance of the company’s cash holdings athome and abroad , by concepts defined and theoretical analysis on thecompany’s cash holdings are discussed in detail, and proposed theresearch hypothesis.First of all, the thesis studies the listed companies in southwestChina and selects three years data of 140 listed companies from 2008 to2010 for the study sample, established a multiple regression model of theinfluencing factors of cash holdings in listed companies, obtains theconclusions through empirical analysis. The conclusions are as follows.Cash holdings of the listed companies are higher. Factors that affect cashholdings, Company size, cash substitutes, cash flow, financial leverage,investment, bank debt, the proportion of managerial ownership and theproportion of state-owned shares are negatively related to cash holdings.Ownership concentration, the degree of shareholder protection, theproportion of independent directors, leadership institutions dummyvariables cash holdings are positively related to cash holdings, but boardsize is not related to cash holdings. The performances of company size,the degree of shareholder protection, the proportion of managerial ownership, the leadership of dummy variables are not significant. Furtherit infers that this region of the corporate governance structure is notperfect, and lack of protection of minority shareholdersThe second, on the basis of first paper studies, this thesis is set thesignificant factors that affecting the cash holdings of listed companies inSouthwest China to explanatory variables, and establishes the estimatedmodel of normal cash holdings of listed companies. The results of thesample data into the model derived are the normal cash holdings, andcompare with the actual cash holdings to obtain excess cash holdings, inorder to establish the company’s excess cash holdings and operatingperformance of the relationship of research model. The study concludedthat the excess cash holdings the listed companies in Southwest China issignificantly and positively impact on operating performance. In otherwords, the company’s excess cash holdings is more a long time, the morehelp to improve the company’s operating performance.