The Research On The Motivation Of Chinese Listed Companies’ Cash Holding Behavior

Cash management is an important work of enterprise financial management, the company’scash adequacy related to whether the enterprise production and business operation activities willbe carried on smoothly, cash holding behavior has become a focus of academic research, howmuch of cash to hold will be conductive to enterprise development? Why some companieschoose high cash level? Many Chinese scholars discussed this problem from theoretical andempirical perspectives. This paper mainly discussed the motivation of Chinese companies’ cashholding behavior, this paper choose companies from Shanghai stock exchange and Shenzhenstock exchange in2009to2011as research sample, using empirical method to analyze whetherthe agency theory or financial constraint theory can explain the cash holdings behavior very well.This paper establishes the empirical research basing on the theoretical analysis, this paperwill research cash holding behavior from the companies’ corporate value, investment efficiencyand business performance, by the way of reverse test. Referencing the previous cash holdingsresearch results, this paper will use the value regression model, investment cash flow sensitivitymodel and index inspection to text the real reason of high cash level, which one is the betterexplanation, agency theory or financial constraint theory? The results found that the motivationof cash holding is prefer financial constraint theory. This paper include following several parts.The first part is literature review. Second part is the regression testing of the models and thenanalyze, depending the theory. The results with theories will find the most likely motivation ofChinese listed companies’ cash holding behavior.