The Research On Monetary Policy Adjustment, Investment Opportunity And The Level Of Corporate Cash Holdings

The level of cash holdings which is closely related to an enterprise’s managementstrategy, investment strategy and financial arrangements is an important financialdecision, and an important content of enterprise financial management research. Thestudy of factors affecting corporate cash holdings plays an important role for corporatecorrect decision-making and stable operating. Monetary policy as one of the main toolfor the government’s macro-control affect the financing strategy and investment strategy,thereby affecting the level of corporate cash holdings. Business investmentopportunities herald the future development of enterprise, affect the financing needs ofenterprises, and thus indirectly affect the level of corporate cash holdings.Combined with the background of China’s enterprise system, the paper studied theinfluence of monetary policy, investment opportunities and their joint action oncorporate cash holdings level. At first, the paper sorts the existing literature of the levelof cash holdings.Secondly, the paper respectively analyzes the mechanism of monetarypolicy adjustment and investment opportunities impact on corporate cash holdings, andput monetary policy and investment opportunities in the same frame, from the angle ofthe combination of macro monetary policy and micro enterprise features to study itsjoint action on corporate cash holdings of monetary policy. Based on the above analysis,the paper proposes the corresponding research hypotheses. Further more, this paperselects the research sample data of1320A-share listed companies from2008to2013todo the empirical test on the proposed research hypotheses. Finally, the hypothesisempirically show that, when the monetary policy change from ease to tight, companieswill increase their cash holdings; the more investment opportunities hold by theenterprise, the higher level of its cash holdings. When monetary policy change fromease to tight, and the company has more investment opportunities, its cash holdings willbe increased.The innovations of this paper are as follows: Firstly,expand the researchperspective of corporate cash holdings. Previous research on the level of corporate cashholdings are more concentrated on internal factors,lack of the macro environmentalfactors, especially the impact of monetary policy factors. By studying the impact ofmonetary policy, investment opportunities, and their joint action changes on corporatecash holdings; put macroeconomic factors and micro-enterprises operating conditionsinto the same framework, to broaden the horizons of research, increasing the depth and breadth of research. Secondly, the article reveals the influence of the mechanism ofmonetary policy, investment opportunities. One is from the perspective of monetarypolicy credit pathway conduction reveals the influence of monetary policy adjustment toinfluence the corporate cash holdings level. The second is From the perspective of theimpact of investment opportunities to affect corporate financing needs, thereby affectingthe logical relationship of corporate cash holdings reveals the mechanism of theinvestment opportunities impact on corporate cash holdings.This study will helpenterprises optimize cash management, and provides the foundation for the formulationof monetary policy.