Political Connection, Diversification And Cash Holdings

Chinese companies are currently in economic transition period, in the process of thedevelopment of the enterprise, the government plays a key role. Therefore scholars athome and abroad as well as social media will focus on the relationship between enterpriseand government, the relationship between them will affect the development of theenterprise in the future, how to correctly handle the relationship between the enterpriseand the government, and improve their own value. What effect does the government’sspecific management behavior of enterprise has become the current hot topic of scholars,however, very representative enterprises of diversified management behavior, so bydiversified to study the relationship between government and business. Cash is veryimportant in the process of enterprise operating assets, some scholars in the study foundthat compared with the U.S. companies, listed companies in China to hold large amountsof cash, so scholars began to study the behavior of enterprise cash. So this article researchabout the relation between government and enterprises, through diversification and cashlevels two perspective to study, so the relations between and among will as the mainresearch content of this article.Thesis mainly includes two parts, the first part of the research of the relationshipbetween political association and enterprise diversification. Diversity and divided intoregional diversity and industry diversification, concretely analyzes the political relation isinfluential specific management behavior of enterprise. The second part of the exploratorypolitical associations, diversification and cash levels together research, and from the Angleof cash levels to study the relationship between the government and enterprises. Throughthe analysis of the diversity of political association and the relation between politicaloperation and the impact on the level of cash holdings.In this paper, with the deep Shanghai two cities listed companies from2008to2012as sample, political association index, diversified index and cash levels of indicators andrelated to financial indicators data, based on the empirical research. Test the influence ofpolitical association of diversified and political association, diversification, and therelations between and among cash levels. Research conclusions are as follows:1. Thepolitical associated enterprises are greatly influenced by the geographical diversification;2.Political associated enterprises are greatly influenced by the industry diversification;3. Relative to the political affiliated enterprise, associated enterprise diversified managementbehavior will hold a lower level of cash.