The Impact Of Expected Inflation On Corporate Cash Holding Behavior

Combining macroeconomic policies with micro-subjective behaviors is the current direction of economic research.This article selects the A-share listed companies in Shanghai and Shenzhen stock exchange from the first quarter of 2010 to the fourth quarter of 2016 as the object of investigation,and the panel data model is constructed to explore the impact of inflation expectations on the cash holding behavior of the enterprises from the perspective of macroeconomic policy.This article first reviews the relevant literature on the factors affecting corporate cash holding and inflation expectations,and analyzes the related theories of corporate cash holding and inflation expectations.This paper uses the survey data of the People's Bank of China to establish the Household Savings Questionnaire System and uses the time-varying parameter method based on normal distribution to measure the expected inflation rate.The empirical analysis of the fixed effect model shows that when the enterprise expects future inflation rate rises,the level of cash holdings of companies declines.However,with the inflation expectation rate reaching a certain level,enterprises will adjust the level of cash holdings upwards with the increase of expected inflation rate.When the rate of inflation is expected to rise,the U-shaped relationship of cash held by non-state-owned enterprises is more significant,that is,the expected inflation rate is more correlated with the cash holdings of non-state-owned enterprises,while the expected inflation rate and cash holdings of state-owned enterprises do not have a significant U-shaped relationship.The U-shaped relationship between expected inflation rate and cash holdings is stronger in enterprises with high growth,while in low growth enterprises,it is weaker.The U-shaped relationship between the expected inflation rate and the cash holdings is stronger in small scale enterprises,while there is no significant U-shaped relationship between the expected inflation rate and the cash holding level of the large scale enterprises.Finally,based on the findings,we get some inspirations and suggestions.