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Research On Financing Constraints And Cash Holdings Of Listed Companies

Posted on:2015-02-25Degree:MasterType:Thesis
Country:ChinaCandidate:Q NanFull Text:PDF
GTID:2309330431967237Subject:Accounting
Abstract/Summary:PDF Full Text Request
Cash is an important part of enterprise assets, cash holding policy is animportant content of financial management for enterprise operation anddevelopment. Cash holdings is not only about daily payment, tax payment,employee salary payment, but also related to the enterprise investment, financing,dividend distribution of financial decisions. However, because of agencyproblems and information asymmetry, China listing Corporation generally facefinancing constraints. Financing constraints, refers to the capital market whichexists serious information asymmetry phenomenon caused by internal andexternal, so the firm’s financing cost is very different, the external financingcost is much higher than the internal financing cost.Based on the financing constraints theory and the theory of cash holdingsliterature in past, and study the characteristics of the financing structure of listedcompanies in China, the paper constructs the financing constraint index.Different from previous scholars of the method distinguish the financingconstraints, This article does not simply using unvaried or multivariate financingconstraints divided, but divided in two steps according to the characteristics ofthe financing structure of listed companies in China. Firstly, the paper use thescale of the enterprise to make general classification, and then use thecomprehensive index of the rate of return on equity and interest coverage ratio tosubdivision, intend to judge the impact of financing constraints on cash holdingsby listing Corporation classification test.Then, this paper selects listing Corporation financial data of2007–2012two stock markets as the research sample selection. The paper select ratio of cashand cash equivalents and net assets as the dependent variable, select the cashflow and cash flow volatility and investment opportunities and dividend leveland asset liability ratio and capital expenditures and cash substitutes as variables.Use these variables contribute the construction model, and descriptive statisticsand regression analysis on the data. The results showed: When the internal and external financing cost is verydifferent from each other, enterprises will hold more cash in order to maintainthe normal production and operation and reduce the probability of financial crisis.The corporate with strong financing constraints, cash flow volatility and the levelof cash holdings significantly positive correlation; The corporate with strongfinancing constraints precautionary motive is stronger than the corporate withweak financing constraints. Although the company’s degree of financingconstraints facing the strong and weak points, but in the motive of cash level,the precautionary motive is stronger than the transactions motive.Finally, this article puts some forward countermeasures: From theperspective of financing constraints, enterprises with financing constraintsstrong should actively improve the financial situation of enterprises, expandfinancing channels; enterprises with financing constraints weak should improvethe efficiency in the use of funds,give full play to the role of the board ofdirectors and board of supervisors, supervise manager’s behavior, reduce theagency costs by strengthening governance and supervision, so that corporatecash holdings can be kept at a reasonable level, to eliminate funding for areaswhich not conducive to enterprise development. From the internal perspective,unlisted companies should strengthen ties with other financial institutions suchas banks, reduce the degree of information asymmetry, so as to effectivelyreduce the financing constraints, alleviate the financing pressure; listedcompanies should create multiple large shareholders ownership structure,prevent the controlling shareholder’s occupation behavior, to protect the interestsof minority shareholders. From the enterprise perspective, regulationdepartments should strengthen supervision of listing Corporation dividend policy,guide the listing Corporation to make reasonable dividend policy; capitalmarket need more adjustment because of the imperfect.
Keywords/Search Tags:Financing Constraints, Cash Holdings, AsymmetricInformation, Empirical Analysis
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