Study On Environmental Uncertainty,Customer Concentration And Enterprise Cash Holding Lever

With the deepening of global economic integration,the life cycle of products has gradually been shortened,and the customer needs switch into personalization.Under such circumstances,more and more enterprises start to strengthen supply chain integration and management for the long-term stable relationship between the suppliers and customers.As Wen Decheng said in 2006,if the enterprise wants to stand out in the increasingly competitive market,it has to make the entire supply chain as an advantage and through which enhances its competiveness.The supply chain integration,especially the clients who are also the important stakeholders of the enterprise and their concentration degree,often significantly influence enterprise's management strategy and financial decisions.And cash holding,as a vital part of the enterprise's financial decision,determines the survival and development of enterprise.There are many research literatures about the enterprise's economic consequences resulting from concentration of the key customers and the factors that influence the enterprise cash holding level.Their combination,that is,discussion on the influences the concentration degree of clients will make on the enterprise's cash holding,however,is comparatively less.Otherwise,enterprises make their management activities under specific market environment,the uncertainty of which will influence the enterprise cash holding level through influencing enterprise managers in decisions,financial constraints,etc.And the dependency between enterprise and its key accounts will also be influenced and further affects the enterprise cash holding level.Under such background,the text first tries to discuss the influences that concentration degree of customers will make on the enterprise's cash holding,and whether positive or negative,and whether the influences that the uncertainty of the circumstance will make on different enterprises are significantly different or not.Many Chinese and overseas scholars have made rather mature researches about the influence on cash holding from the internal and external factors of the enterprise.On this basis,from the point of the relevant theories of cash holding and the relationship between enterprises' upstream and downstream in the supply chain,this paper tries to tease out two distinct results bringing to the enterprises(caused by the long-term stable cooperation between enterprise and its key customers,and maintenance of a rather high degree of customer concentration).From this,theoretical analysis of the impact on the key customers and the degree of its concentration is conducted.According to the macro-economic developing trend of China,Hu-quoted and Shen-quoted A-shares IPO in manufacturing industry from 2010 to 2014 were selected as observed samples.Integrated with Chinese realities,consulting study results of Dang Yuejun(2009),Cheng Deqiu(2011),etc.,Opler's(1999)model about the contributory factors of enterprise cash holding level is used for reference,in which,other factors that can influence enterprise cash holding level are added as variable to make regressive analysis with FE.Simultaneously,in order to take a closer look at the various influence that different customer concentration could make on cash holding level when they are facing high or low environmental uncertainty,this paper makes regressive analysis with interaction item and comparative analysis of classification of deferent level of environmental uncertainty.The research found that,firstly,the higher the degree of customer concentration,the more cash that the enterprises tend to hold.Although the enterprises expect to keep stable cooperation relationship with key accounts in a long term,if the accounts are highly concentrated and have strong bargaining abilities,it will be the management which regulates the risk to the enterprise because of the prevention of losing customers or temporary breach of contract,rather than the cooperation itself.Secondly,the higher environmental uncertainty enterprises face,the positive relationship between the level of cash holdings and customer concentration is more significant.Higher environmental uncertainty makes risk increase,and adversely affects the performance and results in more dependence on its main customers.When customer concentration is further improved,the risk of customer loss is improved likewise.Therefore,rational management will remain high-level cash holding for precautionary motive demand.Environmental uncertainty stimulates the cash holding of enterprises which customers are highly concentrated on.This conclusion has enriched the literature in the relevant fields,and in the meantime it has certain enlightening significance for enterprises to make cash holding decision in face of the changes of market environment.