Sharrholder Relations, Cash Holdings And Value

The shareholder relations are excluding the formal contract between shareholders,through the invisible contract and non-property right and so on established by specific connection,and are private resources which hiding in the shareholders of company.The relationship capitalism generally exists in Asia region,especially in Chinese society which orientation and relationship control is the basic characteristic.Uphold the past "Equity control chain" paradigm,the current literature simply used the shareholding ratio as the basis to divide shareholders into majority shareholders and minority shareholders,but the "relationship" between majority shareholders and minority shareholders can actually reconstruct the company's power distribution,thereby affect company's internal governance mechanism.This relationship is ensuring that the substitute mechanism can be fulfilled successfully under the existing law and imperfect market condition,be able to alleviate the defects of formal system to a certain extent and promotion of enterprise development and economic growth.But also due to the diversity of hidden relationships,this relationship makes it possible to increase the incidence of opportunistic behavior of the members in the network.Minority shareholders can rely on implicit contracts between controlling shareholders and section and the relation between property rights and other complex network relations to constitute "shareholders in the relationship" enjoying the interests of the better arrangement and making the counterweight to failure,which affects the company internal governance efficiency.Then,do the existence of the relationship between shareholders promote the efficiency?First of all,this paper selects to look into the relationship between other big shareholders in the top ten shareholders except the first big shareholder and the largest shareholder;secondly,to research the above problem,this paper look into impact of the relationship between shareholders,cash holdings and value.The reason to choose cash holdings as breakthrough point is that domestic and foreign listed companies in recent years universally hold a huge cash that has aroused widespread concern in theory and practice.It is an important strategic decision of enterprise,and is directly related to the enterprise assets and liquidity risk management,and huge cash is very easy to be free to use by agents.How do the shareholder relationship influence corporate cash management efficiency?What is the possible mechanism?This paper further investigates how the relationship between the shareholders in the enterprise affect free cash flow of the efficiency of investment.Discussing the influence of shareholder relations on corporate cash holdings and value is helpful to deepen people's understanding of the important issues of how to realize overall control,collusion,private benefits obtaining and other important issues.This paper firstly analyses shareholder relations,cash holdings and the value related theory,and a review of the previous research results onthe three,found that the shareholder relations as the research angle of the literature is not much,and most of them are the theoretical analysis and case studies,especially lacks the literature study including cash holdings and shareholder relations.So,based on the theoretical analysis of the relationship between the three,this paper takes A-share manufacturing listed companies in Shanghai and Shenzhen from 2005-2015 as samples,constructing a quantitative index of shareholder relations from the two aspects of relationship types and influence power,the marginal value of cash holdings of shareholders relationship model,level and value of the enterprise the cash were studied.The study found that the existence of the correlation between shareholders or the same nature of equity will increase the company's cash holdings and reduce the marginal value of cash holdings,on behalf of "the view of agency".Because shareholder relations will strengthen negative effect on the free cash flow and investment efficiency;On the contrary,if the shareholders are together for the sponsors,will reduce the company's cash holdings and increase the marginal value of cash holdings,on behalf of "trade-off view".Because shareholder relations will weaken negative effect on the free cash flow and investment efficiency.At the same time,the relationship between the shareholders can influence of the board of directors to consolidate the effect.Overall,if the three shareholder relations coexists,corporate cash holdings marginal value will be reduced.Based on informal contract of the special relationship between the shareholders in corporate governance research scope,this article first studied the relationship between the shareholders on the effect of cash holdings and the understanding of the mechanism of action,and analyzed the agency conflict of modern company,strategic choice and the economic consequences in the equity of the relational structure.