Study On The Impact Of Cash Holdings On Corporate Value

As an important asset in the enterprise, Cash not only relates to the daily production and business activities of the enterprise, and the other trading behavior of the enterprise, such as corporate investment behavior, financing activities, mergers and acquisitions behavior and so on. Therefore, the problem of corporate cash holdings has been a hotspot of academic research at home and abroad.This article first summarizes the domestic and foreign research on cash holdings, including the theory of the cash holdings motivation, trade-off theory, the pecking order theory, agency theory, strategic value theory and theory of environmental regime. It analyzes the relationship between the corporate cash holdings and corporate value from the perspective of stakeholders, and the relationship between investor value recognition and corporate value.This study found that cash holdings held by listed companies in China accounted for16.025%of the average total assets of enterprises, far higher than the listed companies in the United States and Britain and other European and American countries; From the trend of change, the ratio from14.534%, the lowest rise, in2008to16.768%in2009. And since then the level of cash holdings remain relatively stable until2011, all maintained at more than16%.This paper studied the impact of corporate cash holdings on corporate value based on the2008-2011data from China’s listed companies of shanghai market. The regression results show that corporate cash holdings are positively correlated with the enterprise value. The enterprise has sufficient cash, which not only can withstand the financial risks, but also can grasp fleeting opportunities in the market, so as to enhance the corporate value.Since companies tend to hold a high level of cash, will the acts of high cash holdings be agreed by investors, will such investor value recognition affect the value of corporate? On the basis of above study, from the perspective of investor value recognition, study the relationship of corporate cash holdings, investor value recognition, corporate value. In this paper, investor value recognition is the recognition and affirmation of certain behavior or attitude to corporate by investors, resulting in investment interests and confidence of the corporate. Therefore, this article uses Investor Confidence Index measure investor value recognition. By empirical research:corporate cash holdings can improve corporate investor value recognition, corporate cash holdings is considered by investors in the investment decision-making factors, highlighting the importance of corporate cash holdings. If the company has more cash holdings, the investor value recognition is stronger, and the corporate value is greater. The investors is a bridge to connect the corporate with the capital market, investors’views of corporate financial behavior will have a direct reaction to the capital markets. High cash holdings can enhance investor value recognition, thereby enhancing investors’confidence, reflected in the capital markets will be able to improve the value of the corporate.Unlike other articles that directly investigate corporate cash holdings and corporate value, in this article, from the perspective of investors value recognition, analysis the impact of corporate cash holdings and corporate value relationship, provides empirical evidence of the relationship between cash holdings and corporate value fromdifferent angles, clearly illustrates a mechanism between cash holdings and corporate value. Meanwhile, according to the specific environment of our country, use the impact of cash holdings on investor value recognition, and provides a new angle and reasonable proposals for the management and securities market regulators, help enhance investor value recognition, promote the enhancement of corporate value and the prosperity of the capital market.