Internal Control Quality,Cash Holdings And The Competition Effect Of Cash Holdings

Cash is a vital asset to the enterprise,which is concerned with the future and destiny of the enterprise.Indeed,cash holding is a very important factor for the development of an enterprise.Therefore,cash holdings have always been a hot topic among scholars.But can the cash holding play a competitive role,if lack of effective management and imperfect internal control system?I believe that the higher level of cash holdings is,the more cost of cash holdings will be.It may even become a convenient condition for the management to seek personal gain,rather than as a tool to enhance the competitiveness of the market.Therefore,from the perspective of property right nature,this paper explores whether the cash holdings of enterprises can become favorable conditions for market competition,and the quality of internal control can enhance the competitive effect of cash holdings.In this paper,the data of companies listed on Shanghai and Shenzhen A-share main board from 2010 to 2016 was used as the research object.On the basis of the existing research,we use principal agent theory,trade-off theory,predatory theory,pecking order theory and information asymmetry theory to analyze them,and the following conclusions are obtained:the cash holdings of listed companies has a significant positive effect on cash holding competitive effect,and this effect is very obvious in the non-state owned enterprises,but it does not have such effect in the state-owned enterprise.Among the companies with high internal control quality,cash holdings have a stronger positive effect on the competition effect of cash holding,while in companies with low internal control quality,cash holdings cannot significantly enhance the competition effect of cash holding;in addition,internal control Quality can significantly enhance the cash holding competition effect of non-state-owned enterprises,but this effect is not significant in state-owned enterprises.In conclusion,this study shows that the quality of internal control has a moderating effect on cash holdings and their competitive effects,but this effect does not exist in state-owned enterprises.