Refinancing Risk Debt Maturity Structure And Company's Cash Holding

In the reality,the financial decision-making of enterprises is closely related.Does the refinancing risk with the shorter debt maturity structure affect the company's cash holdings? If so,how does it affect? And what actions will companies take to deal with the risk of refinancing brought by the short-term debt maturity structure?Therefore,the purpose of this paper is to test the impact of the maturity structure debt on cash holdings.To answer the above questions,this paper uses the data of all the A-share listed companies in Shanghai and Shenzhen from 2000 to 2014 to test the impact of the debt maturity structure on the cash holdings.The study found that a shorter debt maturity structure significantly increased the cash holdings of firms and more cash reserves from cash flows from operating activities.The results show that under the precautionary motive,the company will tend to hold more to avoid the adverse effects of market friction in the process of refinancing when the debt maturity structure is short,that is,higher refinancing risk,more cash,and will accumulate more cash from the cash flow of operating activities.The findings of this paper enriches the economic consequences of debt maturity structure and is helpful to understand the company's cash holding decision.