Macroeconomic Fluctuations,Industry Characteristics And Cash Holdings Competition Effect

As the most liquid assets, cash holdings and its economic consequences are more and more concerned by the academic and practical circles. In recent years, based on the pecking order theory and agency theory, domestic and foreign scholars have made great achievements in the research on the influencing factors of cash holdings, and the formation of the cash holdings of high-value concept and the concept of low two very different perspectives in the study of the economic consequences. In the face of the controvers y, some scholars from the perspective of industrial organizat ion theory, applying the interaction between the company and its competitors to the study of the company’s cash holdings, predatory theory think that corporate cash holdings is helpful to deal with from exposure to the risk of product market competition, which can have a deterrent effect on competitors, and then obtaining a advantageous position in the fierce competition, namely cash holding has a competitive effect. Based on the above content, this paper takes the annual data of A-share listed companies of 2003-2014 as the research sample, based on the special economic system and the background of transition economy in China, combined with the characteristics of the industry in which the company’s industry to test macroeconomic fluctuations impact on cash holdings competition effect.The study found that:(1) Cash holdings has a competitive effect. Compared with macro economy in the uplink per iod(i.e. the expansion period, the flourishing period), cash holdings competition effect is more significantly in the period of macroeconomic downward(i.e. systole and recession); and enterprises face more severe financing constraints, the more signif icantly competitive effects;(2) In the macro economic downturn period, industry characteristics significantly affect the presence of cash holdings competition effect, the industry in which the enterprise market more competitive, higher growth and the strong dependence on external financing, the more significant competitive effects of its cash holdings;(3) In the macro economic downturn period, compared with the industry policy support of industry, industry by industry policy support for cash held its competition effect is more significant, namely industrial policy mainly through financing constraints path to cash holdings competition effect, rather than investment opportunity path, this just shows that industrial policy has played an effective role in policy control, easing financing constraints, thus promote the development of enterprises. Further, based on China’s special economic system, the study found that the effect of macroeconomic fluctuations on cash holdings competition effect to the significant differences between state-owned enterprises and private enterprises, and the more intense market competition, more growth strong, the less dependence on external financing and higher by industrial policy support in the industry in which private enterprises, competitive effects of its cash holdings of more signific ant.Furthermore, based on the serious asymmetry background of regional financial development in the transit ion period, the study found that the effect of macroeconomic fluctuations on cash holdings competition to signif icant regional differences, compared with the higher level of financial development area, cash holdings competition effect is more signif icant in the area that the low level of financial development, this reflects the role of the financial development in the promotion of corporate finance environment; and a lower level of financial development in the region, the more intense market competition, the stronger growth the higher the degree of external financial dependence and by the industrial policy to support the less in the industry in which enterprises, competitive effects more significant cash holdings.Based on the above conclusions, this paper obtained the following enlightenment : first, our country is in economic transition period, frequent fluctuations in macroeconomic, enterprises should pay close attention to the macroeconomic trends and the industry environment, and according to its internal and external environment to develop a reasonable cash holding decision to resist the impact of macroeconomic fluctuations, and then continued to promote or consolidate their product market competitive advantage. Second, the study found that financial development and industrial policy support can ease the financing difficult ies faced by the company, thus weakening the competitive effect of cash holdings. Therefore, the government should continue to promote the deepening of China’s financial system reform and improve the financial system, to promote the sustainable development of the financial market, to provide a stable financial environment for the theme of micro enterprises. Third, the study found that macroeconomic fluctuations of different micro subject cash holding competition effect, there was a signif icant difference. Therefore, the government in the formulation of macroeconomic policies should be attention to the macroeconomic policy differences on the impact of different micro subject, especially the financing difficult ies in areas with low enterprises, private enterprises, the fierce competition in the industry and the level of financial development of enterprise.