Corporate Governance?uncertainty And Level Of Cash Holdings

Liquidity management is an important part of enterprise financial management decision-making,the decision of cash holdings in liquidity management is a difficult problem in financial circles.In the late 1990 s,there was a large amount of cash and cash equivalents in western companies,which attracted the attention of scholars who studied the influence factors of the company's cash holdings.In China,the level of cash holding of most listed companies shows a rising trend,but the relevant research in China is still immature.Why did listed companies have some cash reserves,what reasons influenced the level of cash holdings.Therefore,research of cash holdings of Chinese listed company has an important significance.This article adopt the method of combining theoretical analysis and empirical test,through deep analysis of cash holdings related trade-off theory,the pecking order theory,and the principal-agent theory,from the perspective of corporate governance and uncertainty,we debate the factors that might affect cash holdings.And then take advantage of China's Shanghai and Shenzhen two markets,total of 730 listed companies in 2008-2016 financial statements data,a total of 6570 samples,using empirical analysis of panel data model on how these factors affect the the level of company's cash holdings structure.This paper draws the following conclusions: the increase of the variable of the board will lead to more cash holdings.In other words,the larger the board and the smaller the proportion of independent directors,companies would have more cash reserves;Company ownership structure variable has a negative relationship with the level of cash holdings,the lower proportion of share of first big shareholder and the higher shareholding of the second to the tenth largest shareholder,the company keeps a relatively low level of cash holdings;The variable that reflects the degree of market competition is positively correlated with the company's cash holding level,and the cash holding will increase with the increase of market competition degree;Increased uncertainty of Company level can lead to the increase of cash holdings,further with decomposition of uncertainty,compared with idiosyncratic volatility,the influence of systematic volatility on cash holdings is more significant;Finally,it is found that theaverage cash holdings of state-owned companies are smaller than the level of non-state companies.The main innovations of this paper include:we got the system indicators to measure the comprehensive management level of the company through main component analysis of the governance variables of listed companies;Using the three factor model decomposition on stock price volatility of listed companies by,and using business growth factors at the same time to study the effect of overall uncertainty,the system uncertainties and idiosyncratic uncertainty on corporate cash decisions.This paper holds that we should strengthen internal governance mechanism firstly,alleviate agency conflict and optimize the company's equity structure.At the same time,pay attention to the improvement of non-state enterprise situation and enhance the vitality of the non-public sector of the economy.Also we should improve the external governance environment gradually to reduce the enterprise's financing constraints.