Monetary Policy, Internal Control And The Value Of Cash Holdings

With the outbreak and spread of the global financial crisis in 2008, the financial conception of "cash is the King, moderation is the first " has been identified and accepted by more and more small companies, and many managers think cash is a magic weapon to help the company to survive the financial crisis. Cash is a kind of medium of exchange in capital market, and its liquidity is very strong. So its investment efficiency has important influence on the operation efficiency of the company. As the results of the company’s risk and return balance, cash holdings reflect the company’s financial strategy decision and management behavior. Associated with the macroeconomic environment (such as monetary policy), and micro enterprise behavior, such as internal corporate governance, corporate characteristics, cash holdings affect corporate performance and corporate value through a series of role. Since 1990, the capital market of western developed countries appeared to hold large amounts of cash and cash equivalents, what makes the cash holding behavior problems get more and more attention. Today, the issue has become an important issue in the field of financial research.After 2008, Scholars pay more and more attention to the impact of financial crisis on the economic behavior of micro enterprises, and the research on the relationship between macro economic policy and micro enterprise behavior has increased, with scholars at home and abroad carriying out a series of research on the financial crisis. In the cross study of macroeconomic policy and micro enterprise behavior, some scholars have studied the financial crisis and corporate cash holdings. Under the impact of the financial crisis, liquidity of capital in the world is not enough, which makes corporate finance more difficult and also makes scholars to further examine the relationship between macroeconomic policy and cash holdings. At present, some scholars have introduced the macro economic environment in the study of the influencing factors of cash holdings, but there are few studies on the combination of the macro economic environment and the micro enterprise cash holdings. What’s more, there is no research on the relationship between monetary policy, internal control and the value of cash holdings, which is also the significance of this study.This paper firstly sorts out and analyzes the literature related to the subject of this paper. Then, based on the theory of internal control and cash holding value, this paper puts forward the hypothesis In this paper, the data of Shanghai and Shenzhen A shares of listing Corporation in 2009-2013 (the actual time interval to 2008-2014) isthe initial sample. Based on the information asymmetry theory and pecking order theory, principal-agent theory and free cash flow theory, and using multiple linear regression model, the relationship between internal control and the value of cash holdings is studied, under different property rights or different monetary policy. The results are as follows. Firstly, in the whole sample, the internal control and the cash holdings are positively correlated. Secondly, compared to non state owned enterprises, the relationship between internal control and cash holdings is more significant in state-controlled companies, Thirdly, compared to the tight monetary policy, loose monetary policy, the positive correlation between internal control and the value of cash holdings is more significant under the loose monetary policy. Lastly, compared to non state owned enterprises, the relationship between internal control and cash holdings is more significant under the loose monetary policy. The findings of this paper enrich the theory of the value of cash holdings, provide reference for enterprises to increase the value of cash holdings by improving the quality of internal control, and make the enterprise realize the importance of internal control.