| Cash, a kind of capital with the strongest liquidity and the least profitability,plays an important role in the financial management. There are two advantages of possessing cash:? Saving the cost of external financing;? Satisfying the investment requirements when the company needs to make profitable investments and dealing with accidental payment. This is the Cash Holdings' Motives put forward by Kaynes in 1936 -Transaction Motive and Precautionary Motive 1. Currently, the major research about cash holding has studied the influential factors, theoretical basis, the confirmation of optimal amount of cash holding and the value of the cash holding for the company. And they mainly studied from the aspects of the stakeholders and the original financial conditions of the company. However, attention should also worth being paid to the phenomenon that, more and more companies begin to stress on the management of supply chain. Suppliers and customers are the key components of the supply chain. They have decisive influence on many aspects of the company such as strategies and operations. This paper starts with talking about the non-stakeholders,suppliers and customers, and then does research on the influence of the buyer-supplier relationship on the cash holding. At the same time, researches on the internal control will be done. Internal controls of high quality can not only increase the credibility and integrity of information, but also has great influence on increasing the operation efficiency. It influences the choices made by the managers on financial policies and improves the operation efficiency by reducing the asymmetry, the agency costs, and the financing cost. When the trade of relationship leads to the holing cash be in a higher or lower level, whether internal controlling can do some adjustments on that will be another research focus of this paper.The paper has did some recalling and integration on the theoretical studies of the factors of cash holding, the influence relationship trading has on cash holding, and the influence internal controls have on cash holding. It conducted classified researches from the influence of trading on cash holding under the buyer's market and the seller's market. Also, cash holding at the higher level and the lower level are discussed separately. The paper adopted the manufacture companies of listed companies in Shanghai and Shenzhen from 2008 to 2014 as the studied samples,applying descriptive statistics, correlation analysis, regression analysis, and robustness analysis to study the influence relationship trading has on cash holding,and the adjustments internal controls make to the relationship trading under different levels of cash holding.It has been discovered that there is a positive correlation between customer relationships and the level of cash holding, which is especially obvious for the buyer's market while there's little influence on the seller's market. If the relationship trading of suppliers is strengthened, the holding cash will be significantly reduced. This kind of reduction is quite conspicuous in buyer's market while can be seen little in the seller's market. If the internal controls are introduced in, when the holding cash is at lower levels, internal controls will reduce the decrease of holding cash caused by the supply relationship trading, and vice versa.The research discussed in the paper has enriched the practical evidence on the influential factors of cash holding in the field of theories. It has also conducted studies in depth on how the internal control has influence on decisions made on cash holding under the big picture of the special regime in our country. Furthermore, it has been discussed that how the company should conduct internal management, how to allocate internal resources to adjust the external commercial relationships, and the significant role the regime plays in the economic transition period. |
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