Product Market Competition, Financing Constraints And The Value Of Corporate’s Cash Holdings

Cash as an easy transferred and occupied asset, when the company’s proxy conflict seriously, holding more cash tends to undermine the value of the company. However, after the 2008 ‘s financial crisis, the global capit al market atrophy, bank credit tightening and product market competition becomes increasingly intense, increasing and maintaining sufficient cash is a rational choice of company, the strategic effect of the corporate cash holdings has become increasingly prominent. In the "emerging and transition" system background of China’s, combining with the realistic background of the company’s financing constraints increasing and product market competition intens ifying, this paper examines the value effect of cash holdings of our country company, also examines the mechanism and effect of the two factors on corporate cash. Providing empirical evidence for the different financing constraint and product market competition dynamic company’s cash holding decisions.This paper takes China’s Shanghai and Shenzhen A-share listed companies 2008-2012 data as the study sample, empirical study the value effect of corporate cash holdings, also study the impact of financing constraints and product market competition on it. The main conclusions of this thesis are, overall, corporate cash holdings has a positive value effect.After the financial crisis and under the new situation of the adjustment of national industrial policy, companies with abundant cash holding have the financ ial strength to seize the high-quality investment opportunities and take the product market strategy predatory. Researching result of financing constraints on firm cash holdings value is financing constraints strengthen the value effect of the corporate cash holdings, that is, the financing constraints firm’s the value of cash holdings is signif icantly higher than that of the company with non-financing constraints. And the more intense competition of external product market, the value effect of corporate cash holdings is more signif icant positive. Furthermore, financing constraints will strengthen the product market competition’s positive effect for the company’s cash value effect.The contributions of this paper are: from the perspective of product market competition and financing constraints comprehensively analyse the value effect of the corporate cash holdings, enrich the related research of cash holdings value. At the same time, in the new situation of the adjustment of national industrial policy, verify the value effect of China company’s cash holdings, and provid suggestions to companies’ cash holding decisions, which companies faced with different financing constraints and product market competition,and also help the company to give full attention to corporate c ash holding’s strategic value effect and the impact of the product market competition and financing constraints on it,so as to make corporates better adapt to the development of the new period.