An Empirical Study On The Relationship Between Cash Holdings And Corporate Value

In the field of corporate financial management, cash holding decision is always a core issue. From a macro perspective, the uncertainty of the macroeconomic and business cycle is the main influence factors of the company’s cash holdings. Corporate financial characteristics and corporate governance and other factors are related to the high level of cash holdings. In order to effectively implement the company’s development strategy and achieve business and investment objectives, while avoiding the high cost of external financing, to enhance the company’s value, holding a reasonable amount of cash is necessary.In this paper, the theoretical analysis and empirical research methods are used, the corporate governance, cash holdings, corporate value in a whole framework. Combined with the principal-agent theory, static tradeoff, information asymmetry theory and the pecking order, free cash flow theory, select the 2007-2013 A-share listed company data as a sample, using the principal component analysis method to determine the level of corporate governance and the optimal cash holdings of determination, corporate governance and cash held volume relationship, cash holding amount and the value of the company, corporate governance of cash holding the value of the relationship between quantity and effect of in-depth study. The main conclusions of this paper are:first, the relationship between cash holdings and corporate value is nonlinear, that is, inverted U type relationship. Secondly, the level of corporate governance and cash holdings is significantly positively correlated, corporate governance significantly affects the relationship between cash holdings and corporate value. In view of the conclusion, this paper puts forward the policy recommendations to alleviate the financing constraints, regulate the cash holdings management and improve the corporate governance system, and improve the level of governance.