Research On The Relationship Between Excess Cash-holdings And Over-investment Of Chinese Listed Companies

Cash is a very important financial resource of an enterprise, it has a significant influenceon the enterprise management, investment, financing and other aspects, and it is linked withthe management of the enterprise performance closely. According to the balance theory, whenthe enterprise has cash in the optimal level, but under the not perfect capital market conditions,due to the asymmetric information and principal-agent or the other influence of factors, theenterprise internal and external financing costs will produce the difference, internal cash heldis a kind of the most cheap, the most direct financing, so enterprise will tend to internal hold alarge amount of cash, and even more than the optimal cash holdings, which can lead tosignificant agency issues, and will cause over-investment behavior. On the other hand, due tothe different enterprises are external financing constraints different degrees, in the relationshipof the over-investment and excess cash-holdings, different enterprise also show differentcharacteristics.In this paper the enterprise with the relationship between the excess cash-holdings andover-investment for the study of the main line, and joined the financing constraints factors,examines the financing constraints in different degrees between the different of therelationship. As our country the1111A listed companies on the2006-2010years of data assamples, and combined with actual situation in China, selecting the multiple of interestsafeguard, dividend payment rates and ultimate control nature, asset scales, the companytype,the five index as a measure of financing constraints degree of substitution variables,through to the samples and sample data packet descriptive statistics, relevance inspection andmultiple linear regression processing, from different directions, and probes into the listedcompanies in China is the relationship between the excess cash-holdings and over-investment,and reveals the listed companies in the face of the different levels of external financingconstraints, the over-investment behavior by excess cash-holdings caused is more serious.The main conclusion is:(1) our listed enterprises have the best cash holdings;(2) theover-investment and excess cash-holdings have significant positive correlation, the more cashheld, the more obvious over-investment behaviors;(3) among the financing constraintsdifferent degrees of company, the amount of cash-holdings of the now investing too much influence degree of remarkable differences; The multiple of interest safeguard group, the lowdegree of financing constraints of excess cash for the company to over-investment was higherthan the influence degree of the financial constraint level higher company; Dividend paymentrate group, the low degree of financing constraints of the company, because pay dividends tosuppress the over-investment behavior instead; The ultimate control group, the local affiliatedcompanies relative central subordinate enterprise and private enterprise the forehead is nowmore likely to lead to cash have over-investment behavior; Asset scale groups, with theincrease of the asset scale, the amount of cash-holdings is the more likely to lead toover-investment behavior; In the company type group, the group company in relative, thegroup company of the excess cash held more inclined to over-investment behavior. Finally,this paper puts forward relevant policy Suggestions, in the macro level, government shouldgive more strengthen to the capital market supervision and high degree of financingconstraints of the support of the enterprise; In the micro level, companies should make effortsto improve the investment efficiency of cash flow, harden budget constraints, optimize capitalstructure, and strengthen the information disclosure.