The Impact Of Supply Chain Concentration On Cash Holdingsin The Condition Of Inflation

Enterprise cash holdings reflect its finance and business strategies.The size of cash holdings requires a comprehensive consideration of costs and benefits and makes a trade-off between the two.Holding too much cash will produce an opportunity cost,but if the amount of cash is too little,it will make companies lose good investment opportunities,resulting in a shortage of cost.As the global market competition intensifies,life cycle is shortened,the competition between enterprises has evolved into competition between supply chains.The enterprises are in the middle position of the supply chains,the circulation of funds need to go through the upstream and downstream of the supply chains.As a result,vendors and customers will have impact on corporate cash holdings.However,when the supply chain relationship is concentrated,the ability of negotiation between the customer and the supplier is strong,and the enterprise cash holding level will change inevitably in the aspects of product price,quality,and commercial credit and so on.When inflation comes,prices rise and the purchasing power of the currency decline,resulting in raw materials and labor costs rising sharply,corporate finance space become narrower which lead to chain management disorder.Under such macroeconomic conditions,enterprises in the supply chain are inevitably affected.Therefore,it is necessary to consider how supply chain concentration influences the change of cash holdings in the presence of inflation and make the right decisions in time.Based on the theory of cash holding prevention motive and combined with the financing constraint hypothesis,market competition theory and market predatory effect,this paper studies the relationship between supply chain concentration and corporate cash holding.Firstly,it reviews the motivations of cash holdings and the related theories,as well as the specific fields of cash holding literature,the theoretical basis of supply chain concentration theory,the theory of supply chain concentration theory,and the theory of supply chain concentration theory.And then combed the supply chain concentration and cash holding relationship.In the empirical section,1556 listed companies in Shanghai and Shenzhen A-share manufacturing industry from 2011 to 2014 are selected as the research samples.Based on the theoretical analysis,I put forward the hypothesis,construct the model and define the variables.By using descriptive statistics and correlation test,we can induce the relationship between the inflation,the concentration of supply chain and the corporate cash holdings,and then I use multiple regression and other methods to further verify the extent of the relationship between the three.Finally,the conclusions are drawn and the suggestions are put forward.The results show that: firstly,the higher the concentration of suppliers,the higher the level of corporate cash holdings.There is a significant positive correlation between customer concentration and corporate cash holdings;secondly,under the condition of inflation,corporate cash holding level will decrease,showing a significant negative correlation.Finally,it is concluded that under the condition of inflation,the relationship between supplier concentration and cash holdings is weakened,and the relationship between customer concentration and cash holding is also weakened.