Research On Excess Cash Holdings And Influence Factors Of Listed Companies In China

This dissertation focuses on the determinants and value effect of thecorporate cash holdings in China，with listed corporates as its subjects.Cash is the most liquid asset in modern company.Meanwhile，it is animportant prerequisite to keep company continuous operation.Althoughlisted companies have huge funding and expansion capabilities，many ofthem tend to hold large amount of cash in hand. In China，generally，thepercentage of cash holdings of listed companies is higher than those ofEuropean and other developed countries.Compared with the large numberof achievement of foreign research in cash holdings，the current study incash holding is not profound and just at the beginning stage in China.This article uses the trade-off theory、Pecking order theory and the agencytheory as the theoretical foundation，analyzing the main factors affectingthe excess cashholdings of listed companies.It is important forunderstanding and solving the excess cash holdings problem.This paper reviews the literature of the listed companies’ excesscashholdings motivation which has been researched by the domestic andforeign scholars.Based on the theory of high cashholdings，combinedwith the China’ s economic system and using the2008—2010Shanghaiand Shenzhen listed company data as the research sample，I defined the high cash holding company and divided the sample into two groups：highand low levels，respectively. Based on existing research Papers，using thecontrast method，I discussed the company’s financial characteristics andmanagement features，find out the factors which could affect the excessholding of listed companies. The factors are as below: company size，financial leverage，cash flow，Debt maturity structure,cash substitutes，the proportion of stated-owned shares, the number of the directors,ownership concentration and the Tangible assets. Finally I use the factorsas the research variables to construct a reasonable model，using theempirical research method to analyze the correlation of these factors tothe high cashholding.Based on the analysis above，and then discuss thecorrelation between high cash holdings and company performance. In theend，according to the research conclusions，we suggested that we shouldimprove and develop the capital market，to resolve the high cash problembasically.