Economic Cycle,financing Constraunts And Cash Holdings

Company is an important part of macro economy,survival and development of any business is completed by the macroeconomic environment.It also determines the company cash holdings behavior will inevitably affected by macroeconomic factors.The 2008 financial crisis shows the importance of macroeconomic.However,among the existing literature on corporate cash holdings,there is a little that discusses the macro factors.Based on this,this paper studies the relationship between the macroeconomic environment and cash holdings from the perspective of the economic cycle.First,introduce the trade-off theory,the pecking order theory and agency theory,and present relevant literature about cash holding from the perspective of financial operation,corporate governance and the external environment,then study the background of related systems.In data experiment,choose finally 727 listed companies from 2000 to 2009 in China as the research samples,put the year 2006 and 2007 as strong years on macroeconomic environment,and put 2000,2001,2008 and 2009 as poor years on macroeconomic environment.Study the influence of cash holding from the aspects of economic cycle and financing constraints by descriptive statistics,correlation analysis and multiple linear regression analysis.Finally,discuss the degree of impact of the cash holdings on financing constraint under different economic environment.Through research,this paper has got several conclusions below: There are differences between the cash holdings of listed companies in different economic environment.That is to say,the worse economic environment is,the higher the cash holdings are.Company with high degree of financing constraints is difficult to raise funds and hold more cash because of the narrow financing channel.When the economic environment is poor,the company confront the worse financing environment,financing ability of the company continue to decline,the cost of financing continues to grow.So the financing constraints during this period will have more impact on cash holdings.Therefore,a conclusion is drawn that government departments should provide macroeconomic research and decision-making report with high-quality,also the government departments should make efforts to improve the financial market,and broaden the enterprise financing way.The company should strengthen the cash management and establish effective corporate governance mechanism in order to improve their ability to cope with the economic environment.