Real Estate Value And Ehterprise Cash Holdings Study

The real estate market of China has been rapid developing in the past 20 years, and the price of real estate is very high. The value of real estate is the representation of individual status or enterprise asset level. As an important property of the enterprise, the real estate can reduce the cost of acquiring external debt firstly and enhance the liability of the enterprise; and then affect the total amount and internal proportion of financial flexibility; finally produce an effect on enterprise cash holdings. High real estate value for enterprises can bring the debt flexibility, and effectively ease the financing constraints. In order to maintain the optimal financial flexibility, will enterprise therefore reduce their cash flexibility and reduce the amount of cash holdings? If an enterprise still maintains high cash holdings after the rise in the financial flexibility, whether it will result in a decline in the marginal value of cash? How does the enterprise’s cash and cash flow sensitivity change?Based on the current situation of Chinese capital market, the paper uses the data of the housing building in the annual report of the listing Corporation. According to the provincial level and the city level, the paper studies the related problems of real estate value and enterprise cash holding. The empirical results show that the impact of real estate value is significant in China. In the period of 2004-2013 years, the cash holdings and the value of real estate are negative; the marginal value of cash is negative correlation with real estate value; cash and cash flow sensitivity and the value of real estate are negative correlation. That is, the value of the listing Corporation’s housing market value increases RMB 1, the amount of cash holdings decreases about RMB 0.09-0.11, the marginal value of cash decreases about RMB 0.104-0.123, and the company extract cash from the cash flow about RMB 0.212-0.286. In view of the problem that the real estate value and cash holding behavior may exist, this paper uses the 2SLS tool variable estimation test strategy, and the Tobin Q value is replaced by the test, and the similar conclusions are obtained.As a new financial research field, the research on financial flexibility theory is still in the exploration stage, and has not formed a systematic research system. Therefore, the research of this paper enriches the research on the theory of financial flexibility and enterprise cash holdings. It is helpful for enterprises to arrange financial flexibility in order to ease financing constraints, reduce the cash cost and strengthen the management of the enterprise.