Environmental Regulation,Financing Constraints And Dynamic Adjustment Of Cash Holdings

Cash is the "blood" of enterprises,running through every link of its production and development.Cash management strategy is not only related to the long-term development of enterprises,but also closely related to the survival of enterprises.Due to the changing internal and external environmental conditions,enterprises need to constantly adjust the level of cash holdings.As an important macroeconomic policy of the government,environmental regulation affects enterprises’ financing and investment behaviors,and then affects their financing constraints,thus leading to the continuous adjustment of cash holdings.Although some scholars have deeply discussed the cash holding behaviors of enterprises from the perspectives of macroeconomics,enterprise characteristics and internal governance,few scholars have conducted relevant research on environmental regulation,financing constraints and dynamic adjustment of cash holding.Therefore,from the new perspective of environmental regulation,the paper deeply explores the relationship between environmental regulation,financing constraints and the adjustment speed of cash holdings,which broadens the research boundary of cash holding dynamic adjustment.Based on the balanced panel data of China’s manufacturing enterprises listed in Shenzhen and Shanghai A-share markets from 2001 to 2016,the paper adopts the system GMM model to examine the mechanism of environmental regulation,financing constraints and the dynamic adjustment of cash holdings.The research findings are as follows:(1)Financing constraints has a significant positive impact on the adjustment of cash holdings.That is to say,financing constraints will lead to a faster adjustment of corporate cash holdings(2)Environmental regulation has a significant positive impact on corporate financing constraints.That is to say,when the environmental regulation becomes tighter,enterprises face more serious financing constraints.(3)Environmental regulation has a significant positive impact on the adjustment of cash holdings.That is to say,environmental regulation will lead to a faster adjustment of corporate cash holdings,and this relationship is more significant in the private enterprises and heavy polluting enterprises.(4)Financing constraints is an intermediary variable,which can transmit the influence of environmental regulation on the adjustment speed of cash holdings,but the intermediary process is an incomplete intermediary process.To a certain extent,the paper has enriched the academic literature on the dynamic adjustment of corporate cash holdings,deepened the current theoretical research on the dynamic adjustment of cash holdings,and also provided new experience for the relevant research of government macroeconomic policies and enterprises’ microeconomic behaviors.