Research On The Relationship Between Corporate Structure And Cash Holdings Of Chinese Listed Companies

Proper cash-holding is a prerequisite for corporates to maintain daily operationsand transactions. Therefore, decisions about cash holdings are very important for acompany. The behaviors of cash holding not only reflect the financial and operatingstrategies of a corporate, but also have consanguineous relations with corporategovernance and macro circumstances. This paper will research the relationshipbetween the corporate governance and cash holding by empirical research.First, this paper reviews classical theories of corporate governance and cashholding amount. Then, taken data of2011of China’s Shanghai A-share listedcompanies as research target, I investigate the collective characters of cash holdingsand the effects of corporate governance on cash holdings. Descriptive statistics resultsshow that cash holdings in China’s listed companies are generally at a high level.Then, using several econometric models, I verify the relationship between corporategovernance and cash holdings. The outcomes of regression analysis reveal that inChina’s listed companies the ratio of State-owned Shares, ratio of Corporate Sharesand Ownership Concentration variables are all positively correlated with cash holdingvariable. The ratio of Manager Shareholder has positive linear correlation with cashholding. But, the size and structure of Board of Directors have not significant relationwith cash holding. Furthermore, I analyze those reasons for above empirical resultsand hope that this research can enrich the theories of cash holdings in China’s listedcompanies and provide some foundations for the improvement in corporategovernance.