Government Quality,Financial Development And Cash Holding Level Of Private Enterprises

In the process of China's reform and development,the quality of government and the level of financial development play an important role in regional economic growth.Private enterprises are microscopic economic subjects,and their management decision-making and behavior are enslaved to external environment to a great extent,and in these external environment factors,the government and financial environment have bigger influence on the enterprise management.Cash holdings strategy is an important matter of enterprise financial decision-making,and previous related studies have focused on competition,hold motivation,etc.,but the researches based on the perspective of the government and the financial environment are less.In this paper,we embed government and finance these two external environment factors and research the impact of the government quality and financial development level on private enterprises' cash holdings strategy.Thesis results expand the research perspective of the financial management of private enterprises,and provide a concept of cash management decision for the enterprises.This paper takes 2011-2015 A-share private listed companies in China's Shanghai and Shenzhen stock exchange as samples,and builds the government quality indicator from corruption,justice and efficiency three aspects.This paper uses the financial competition index to measure financial development level,and then through the relevant model,we check the impact of China's regional government quality and financial development level on the cash holding level of local private enterprises,as well as the interaction of the government quality and financial development level in the process of impact on the cash holdings of private enterprises.The empirical results show that in region where the government quality is higher,the local private enterprises will hold less cash,and in the higher level of financial development area,the local private enterprises will also hold less cash.What's more,the government quality and financial development level strengthen each other in the process of impact on cash holdings of private enterprises.On the one hand,the local government has a major impact on private enterprises' cash holdings motivation by influencing the local private enterprises' financing constrain conditions.On the other hand,with local financial markets maturing and financial developing,the external financial constraints of private enterprises can be alleviated,which is helpful to reducing the private enterprises' cash holdings.Both the quality of government and the level of financial development have an important impact on cash holdings strategy of private enterprises,so improving the quality of the government and the level of financial development can help private enterprises to make better financial decision.