Research On The Impact Of Government Intervention To The Corporate Cash Holdings Value

Cash is the asset that the enterprise holds it to meet the daily business pay, debtrepayment, obligations to pay taxes and other financial behaviors. Its liquidity is verystrong, but with the low ability of profit. Cash is very important in the process ofenterprise operating, especially Chinese Corporation’s cash holdings is almost as twotimes as that of USA enterprises. Therefore, a large number of cash holding valueresearches emerge. In the background of government intervention, the cash holdingvalue changes with government intervention. As we know, the relationship between theenterprise and the government has been the focus. Especially, in the background ofeconomic transition and social transformation, relationship between government andenterprises is an inevitable situation to face in the process of social development. As animportant part of the enterprise, cash is easily affected by the external environment.Therefore, this thesis is based on the relation between government intervention andcash holdings value.As the company’s largest shareholder, government can intervene in the day-to-daybusiness activities to transfer her will to the enterprise. Among countries, especiallyChina in the transition period, the phenomenon of government intervention in economyand business is more serious. Therefore, this thesis is based on the former research toanalysis weather government intervention and different controllers can influent cashholding value in order to guide enterprise’s management and practice effectively. Thisthesis analyses that how the government intervention effects cash holding value andthe primary research sample is based on2007-2013Shanghai and Shenzhen two sharesof listing corporations. In the thesis, the relationship of government intervention, theownership and the value of cash holdings are further studied. The results are as follows:(1) Mercerization index is the variables of government intervention and governmentintervention reduces the enterprise The value of cash holdings. The deeper governmentintervention, the lower the value of cash holdings.(2) The value of cash holdings islower than the book value.(3) State-owned enterprises impact cash holding value, and it is lower than that of non state owned enterprises.(4) When government inte rventionis strengthen, cash holding value of the state-owned enterprises have the more seriousnegative impact than that of non state-owned enterprises.