Research On The Internal Capital Market,Ownership Concentration And Cash Holdings In Listed Companies

For an enterprise,there are many important financial decisions,and cash holding is one of them,which has a crucial impact on the development of the enterprise.In addition,with the development of diversification and the frequent of acquisition and reorganization,active internal capital markets exist in the Chinese groups.As a variable of corporate governance,the ownership concentration will also regulate the relationship between the internal capital market and the cash holdings.Therefore,this paper focuses on the following two questions:"1.what is the impact of the internal capital market on the firm's cash holdings?" 2.What is the impact of the internal capital market on the firm's cash holdings at different levels of ownership concentration?Based on the research background and research questions,based on the Principal-agent Theory,the Asymmetric Information Theory,the Transaction Cost Theory and the Balance Theory,this paper establishes a theoretical analysis framework.Based on the related theoretical analysis,this paper uses a sample of actual controllers in Chinese groups of the non-financial listed A shares companies in Shanghai and Shenzhen Stock Exchange from 2013 to 2016,to empirically study on“internal capital market,ownership concentration and cash holdings of listed companies."The results show that:First,in the enterprise group's internal capital market,there are two factors affecting the company's cash holdings.One is the financing constraints(this will make precautionary motive weaken and then make the cash holdings decrease).The other is the agency conflicts(this will make agent motive enhance and then make the cash holdings increase).And the two factors are contrary to the influence on the cash holdings.As a whole,the agency conflict conceals the effectiveness of the internal capital market to alleviate the financing constraints,which makes the enterprise a higher cash holding.Second,when the ownership is dispersed or absolute holding,the agent motive will be stronger.So compared with the independent business,the enterprise group's cash holding is higher.When the ownership is relative holding,the precautionary motive will be stronger.So compared with the independent business,the enterprise group's cash holding is lower.This paper considers the two hot issues in academic circles:the internal capital market and the cash holdings.And considering China's high degree of ownership concentration,this paper studies the internal capital market's influence on the cash holdings in different ownership concentration,which not only has the very strong academic significance,but also has a strong practical significance.