Corporate Governance And The Value Of Cash Holdings

Given the separation between the corporate ownership and right of control, theineffective supervision of the manager may result in their abuse of power, thusundermining the corporate governance capacity and causing the waste of the resources.Statistics show that the presence of correlation between the level of corporate governanceand cash holdings. It is necessary that by taking the relationship between corporategovernance and cash value holdings as the research objective, analyzing the features ofwell-governed and poorly-governed corporations as well as the influence of corporategovernance on usage and value of the cash holdings so as to check if the improvedcorporate governance behavior could enhance the corporate values, tabling the proposalsand suggestions for regulating the corporate governance from the perspective of holding.This paper adopts specification analysis, statistical analysis, and logistic regressionmethods, studies related relationship between Chinese corporate governance and cashefficient by taking listed firms data.The first is the introduction, which describes the purpose and significance of research,research methods and the main content of innovation; second is literature review of levelsof corporate governance and cash holdings, testing related relationship from change incorporate value, relationship between corporate governance and the value of the excesscash as well as the influence of corporate governance on the usage of excess cash andholing level. It indicates that the well-governed corporations could ensure the effectivecash premium, remarkably enhance the value of per RMB yuan; the poorly-governedcorporations would inefficiently dissipate the cash holdings through investment andacquisition, thus lowering the value of per RMB yuan. At last, this paper also providessome suggestions from the perspective of giving play to the competitive mechanism amongthe management level.