Research On Industrial Cluster, Growing Enterprises Cash Holdings And The Economic Effect

Cash is the enterprise’s “blood” to live on, and the policy to cash holdings is also an important financial decision. The growing enterprise is one of the most dynamic economic subject, and how is the situation of its cash holdings? This paper will research the cash holdings of the growing enterprises from the perspective of Industrial Cluster. It is also worth noting that the influence of Industrial Cluster will be eventually reflected in the operating result, and what kind of economic effect will be brought? The research of this paper will be based on above issues.To explore the influence to the cash holdings of growing enterprises by Industrial Cluster, this paper selects the growing enterprises in Shanghai and Shenzhen A-share market as samples, the period is from 2007 to 2013, and they are divided into two groups by the nature of the enterprises. The empirical result finds out that Industrial Cluster could reduce the cash holding level by mitigating the precautionary motive which is the result of the reduction of the risk of financing and investment, and this effect is more manifest among the private enterprises. This paper further investigate the influence to the cash holdings of growing enterprises by Industrial Cluster from the view of both commodity market and capital market, and the empirical result finds out that the growing enterprises in the Industrial Cluster could maintain a relatively low cash holding l evel to improve their competitive power and value; while the growing enterprises which ar e not in the Industrial Cluster have to improve their competitive power and value by increa sing their cash holding level.Compared with the existing literature, this paper, based on the industrial cluster as the breakthrough point, enriches the research of institutional factors impacting on cash holdings. Researching on the economic effect of cash holdings, helps us more in-depth understand the realistic meaning of cash holdings in the industrial cluster.Meanwhile, this provides some inspiration for the growing Enterprise how to deal with industrial clusters and the the government authorities how to set themselves at the right position in the industrial clusters.