Research On The Excess Cash Holdings From The Perspective Of Corporate Governance

Cash is the most liquid assets in the company.It can be immediately input to production and management activities.At the same time,cash is also high opportunity costs and poorly profitable assets.Enterprise should consider how to determine an optimal level of cash holdings and how to improve corporate governance and enterprises' cash utilization efficiency.Firstly,this paper reviews and summarize the documents about how financial characteristics and corporate governance affect cash holdings in domestic and foreign.At the same time,the theoretical basis of corporate governance and cash holdings is combed.Secondly,this paper analyzes the status of corporate governance and reference target cash levels estimated model to estimates the excess cash holdings of 132 listed manufacturing companies on the SMEs board in Jiangsu and Zhejiang province,and describe enterprises' excess cash holdings behavior characteristics(including cash redundancy and cash shortage).Thirdly,surrounding the agency theory,the paper put forward research hypothesis on the corporate governance and excess cash holdings.In the empirical analysis,660 observations can be divided into three groups,the total group(excess cash holdings take absolute value),positive excess cash holdings group and negative excess cash holdings group.Then,through the regression model of corporate governance and excess cash holdings,the empirical research tests the correlation between corporate governance and excess cash holdings of listed manufacturing companies on the SMEs board in Jiangsu and Zhejiang province.Through descriptive statistics,correlation test and regression analysis method,the paper draw the conclusion that there are target cash holdings of listed manufacturing companies on the SMEs board in Jiangsu and Zhejiang province.The separation of control rights and cash flow rights is negatively related to the excess cash holdings;low equity restriction ratio is difficult to reduce the excess cash holdings;The expansion of the board size make professionalism offset inefficiency of decision-making,and do not influence excess cash holdings;Effective supervision of independent directors with financial background can reduce the enterprise's excess cash holdings;chairman and CEO of the two level-one leads to excessive concentration of management authority and increase excess cash holdings;management shareholding and excess cash holdings are U-shaped relationship;The executive government background are negatively related with excess cash holdings.Finally,based on the empirical results of the relationship between corporate governance and excess cash holdings of listed manufacturing companies on the SMEs board in Jiangsu and Zhejiang province,the paper puts forward relevant policy recommendations.Enterprises should determine an optimal level of cash holdings according to their own conditions,and the effective corporate governance can make the enterprise reduce the excess cash holdings.