The Main Determinants Of Cash Holding Of Chinese A-share Companies

Cash holding plays an important role in the whole process of firm operation.It is not only the foundation to keep the company in business,but also the guarantee of smoothing further investments.Therefore,it's necessary and valuable to hold cash at a certain level.However,it is disadvantageous to hold too much or too little cash.Both operation troubles result from holding too much cash and low profitability of holding too little cash will affect firms' growth and developments.For this reason,firms are supposed to set reasonable cash policies,thus the determinants of cash holding have theoretical and empirical meanings.This thesis briefly introduces public firms' development situation and their current cash holding level.Based on the summary and analysis of former literatures,we can conclude the main determinants of cash holding and analyze their principles ofaffecting cash holding.Ultimately,some of the indicators are chosen into the empirical analysis.This study makes use of publicly disclosed information to research A-share listed firms cash holding condition.Meanwhile,in this thesis,we construct two models to study the determinants of cash holding as well as the effects of financial crisis and ownership of firms on cash holding.The main conclusions include:(1)This thesis mainly investigates the effects of financial factors and company governance condition on firms' cash holding.We finds that increases in cash flow,dividend distribution,the proportion of current debt and the concentration of shareholding will result in higher cash holding,while firm size leverage and capital expenditure will have opposite effects on cash holding.(2)With other conditions unchanged,considering the special institution background,the cash holding level of state-owned firms and non state-owned firms are slightly different.Generally,non state-owned firms are more easily to be affected by above-mentioned factors than state owned firms.(3)After financial crisis,Chinese A-share listed companies rises their cash holding level.The increase in cash holding of non state-owned firms are larger than state-owned firms.Meanwhile,the determinants of cash holding also change,which indicates that financial crisis affects the cash holding determining mechanism.