The Listed Company’s Behavior Of Cash Holdings Based On Financial Constraint

Holding a reasonable amount of cash is an important business strategy. With the gradual deepening research of the financial activities, the problems, such as financial earnings management, optimization of cash holdings have received increasing attention in academia. Holding a reasonable amount of cash by companies isn’t only related to the daily transactions and business activities of enterprises, but also helps reduce the risk of uncertainty and get money for valuable activities. About corporate cash holdings problems, western scholars did a lot of researches from different angles, and proposed various theories; from the view of empirical research, the results of foreign studies showed that due to corporate governance structure and differences in capital markets, there are different factors that influence the amount of cash held by companies in different foreign countries. Compared with foreign countries, there is a lack of in-depth studies from multi-angles in China.This paper chooses the data of 1119 listed companies in the manufacturing sector from 2011 to 2013 as sample. According to company size, cash flow interest coverage ratio and the actual controlling person standard, a total of 3357 data is classified. In the premise of financing constraints,cash holdings as explained variable,cash flow volatility and cash flow as explanatory variables, using multiple regression method to do an empirical test about the relation between cash holdings and cash flow, cash flow volatility.The results show that financial constraints affect the listed company’s cash holdings behaviors seriously. For a company with financial constraints, cash holdings is significantly positive related to cash flow volatility; and for a non-financial constrained firm, there is no significant relationship between the two besides, for companies with or without financial constraints, cash holdings and cash flow have a significant positive correlation, and the impact that cash flow puts on cash amount held by financial constrained companies is stronger.From the view of financial constraints, this paper uses empirical analysis to study cash holdings behavior.This paper is divided into five parts:The first part is the introduction, which briefly describes the research background and significance of the topic, reviews and summarizes a lot of domestic and foreign papers about financial constraints,cash holdings and cash holdings under the premise of financing constraints, introducts taxonomy of financing constraints,and gets the basic framework and innovative points of the article.The second part is about the related theories and assumption, this part defines financing constraints and cash holdings behavior, introducts cause of financing constraints,performance indicators of cash holdings behavio and the theory of financing constraints and cash holdings, puts forward hypotheses.The third part is about the empirical research design, which determines the classification criteria of financing constraints and classification scheme,selects samples, variables and regression model to make preparations for the next part.The fourth part is the results and analysis, which uses the foregoing sample data and model to do variables descriptive statistics, correlation test, significance test and regression analysis.The fifth part is conclusions and recommendations,which make recommendations based on the previous empirical research and finally describe deficiencies of this article.There are two main innovative points:First, this paper uses two different methods to classify samples. Referring to domestic and foreign literatures, taking into account the special nature of China’s listed companies as well as the availability of actual data, the paper selects firm size and the actual holding person as a measure of financial constraints for the general classification standards, uses the interest coverage ratio as segmentation classification standards, and designs two programs to sample company data. Second, this paper incorporates sales growth as factors. From previous domestic researches about cash holdings, there is few article that included the sales growth as influence factors, but from a financial point of view,sales growth actually affected cash holding behavior. This article includes sales growth as a control variable in regression model, and analyzes cash holdings behavior from the view of financial constraints.