The Relationship Between Ownership Structure, Board Characteristics And Cash Holdings

Cash is the core of corporate financial decision-making. During the financial crisis, due to the cash flow break many companies on the verge of bankruptcy, while the companies holding large amounts of cash through the business success during the winter. Therefore, in this case, "cash is king" the theory is widely respected, but the cash has special characteristic, due to lower profitability of cash, too much cash would reduce the profitability of enterprises, but also reduces the profitability of enterprises, so companies can neither hold too much cash or too little cash. In this case, the issue of cash holdings has been attracting scholars to study and pay attention on it.But in China, some companies hold a lot of cashes, excess cash will reduce profitability of enterprises. So what factors determine the corporate excess hold cash, from the perspective of corporate governance to do the research and analysis of these factors you need to deviate from the normal corporate cash holdings, when control of the influencing factors, and make the cash in the normal standard,and steady development. As the foreign scholars deepening research the problems of cash holdings, and Chinese scholars also give more attention on this issue, the study of cash holdings has continued to be significant. China is in the stage of economic transformation and the background of listed companies system is relatively unique, so there are still some problems in corporate governance.In this context, we use a combination of theory and empirical methods. First, base on the review of the literatures, base on the agency theory, select the data of A-share listed companies in 2011 to the 2014, systematic research the relationship between the equity structure and board characteristics and corporate cash holdings. In the empirical research, using the method of descriptive statistics, regression analysis, combined with the related empirical case, analysis the relationship between the ownership structure, board characteristics and the corporate cash holdings. Through analysis, we can make a conclusion and provide guidance for the enterprise in the aspect of corporate governance to promote the reasonable use of cash in order to enhance enterprise value.The structure of this article mainly includes five parts:Part one is introduction. This part describes the background of research, the significance of research, the article structure, the content arrangement and the main innovations.Part two is the review of the literature. Research on the articles about cash holdings of the literature review, and summary the previous relevant literature.Part three is the theoretical basis, analysis model and empirical hypothesis. This part firstly defines relevant concepts. Secondly introduce cash holdings and relevant theoretical knowledge. Then build model and the explained the model, and put forward the theoretical hypothesis and analysis model. For the next step research laid theoretical premise and building analysis frameworkPart four is the empirical analysis of ownership structure, board characteristics and the cash holdings. In order to better analysis, first descriptive the corporate cash holdings and important explanatory variables. Then process the ownership structure, board characteristics and cash holdings by regression analysis, finally analyzes the empirical results.Part five is conclusions, recommendations. According the empirical results, find out the problem in ownership structure and board characteristics in China’s listed companies. Give some suggestion and measures to reduce the cash holdings.After regression, I found that state-owned shares ownership is negatively related to the corporate cash holdings significantly. The result can explain the state-owned shareholders have effective supervision and management of the enterprise. Management ownership relation with corporate cash holdings in U, and the result is significant and consistent with foreign research results. The result shows that under the economic system of our country, under the corporate governance structure, the listed company managers in the change of ownership will have different effect on corporate cash. Ownership concentration and corporate cash holdings are not significant negative correlation, when a relatively concentrated equity of listed company, the shareholders for the management of the enterprise control ability is not high, the manager for the purpose of self-interest cash is reduced. For listed companies, the cash to invest in projects with a positive net present value, will improve the enterprise value, with the goal to maximize shareholder value approach. One person has CEO and chairman of the board two jobs, has a positive impact on corporate cash holdings. Obviously, the two jobs are best made by two people, not only can help to better finish the work but also help the risk control. The number of meetings annually by the board often has a negative influence on corporate cash holdings. The meetings of board have good influence for supervision and management.