The Impact Of Cash Holdings On Corporate Value In China's Textile Listed Companies

Cash is the most liquid asset in the company,the amounts of cash impact on the company's operating activities,financing activities and investing activities directly.At the same time,it is the worst profitable assets.The company which holds too much cash will pay a high opportunity cost.Therefore,cash holding has always been an important theoretical and practical problem in company management.Textile industry is the traditional industry and pillar industry in China.In the one hand,it is facing opportunities and challenges from supply-side structural reform and construction of OBOR economic area.On the other hand,it is undergoing the problem of severely limited funding and agency cost.There are a lot of literature on cash holding,especially in the research on the factors of cash holdings.Researchers have also made many achievements in the impact of cash holdings on corporate value.The researchers mainly studied it from the angle of governance environment,the market structure,environmental fluctuations,and capital structure,and the results are also different.On the basis of the existing literature,this paper found that the corporate life cycle cash management has important influence to the enterprise.Therefore,the paper studied the impact of cash holdings on corporate value based on the perspective of corporate life cycle.This paper will embed corporate life cycle,cash holdings,and Corporate Value.Taking the 2012-2016 data from listed companies of Textile Industry in China as sample,using factor analysis to measure the corporate value,the paper studied the impact of cash holdings on corporate value while the company in different life cycle.The results show that cash holdings are positively correlated with the corporate value at growth life cycle stage and maturity life cycle stage;cash holdings are negative correlated with the corporate value at decline life cycle stage.Therefore,the well-developed companies of Textile Industry should increase their cash holdings so that help the companies achieve higher enterprise value.In order to keep the enterprise value,the companies at decline life cycle stage should reduce the current cash holdings,arrange and use cash reserves reasonably,reduce the capital structure and maintain a positive net cash flow.