Governance Environment,Agency Conflicts And Corporate Cash Holding Policy

This paper starts from the theory of corporate cash holding and analyzes the current situation and motivation of the cash holdings of Listed Companies in China.We take the financial data of the corresponding chinese listed companies in Shanghai and Shenzhen stock exchange market from 2010 to 2015 as a sample,then do an empirical study on the affect of the chinese macro environmental governance which was caused by the reform measures such as "eight provisions" implemented by the central government targeted company business hospitality from the end of 2012 on the agency conflict and the cash holding of the corresponding chinese listed companies.And further more,we explore its effect on the value of cash holdings and the external financing constraints of the corresponding chinese listed companies.The empirical results show that:(1)The reform started at the end of 2012 significantly reduced the cash assets holding ratio of Chinese listed companies by reducing the agency cost.It also proved that some cash assets held by Chinese listed companies were caused by agency conflicts between management and shareholders.(2)The reduction of the company's agency costs caused by the reform which started at the end of 2012 made the chinese listed companies occupy operating cash flow of their own less and face the smaller financing constraints after the reform.(3)The value of cash held by the corresponding listed companies is also significantly increased because of the reduced agency costs of the corresponding companies which caused by the improvement of the governance environment from the end of 2012.(4)The further analysis of the sample shows that the change of governance environmente which caused by a series of reform policies started from the end of 2012 puts more affects on the companies whose shares of the circulation capitalization hold by institutional investors is relatively large in the companies' own industry or the proportion of related transactions to business income is relatively large in the companies' own industry but less on the companies whose shares of the circulation capitalization hold by institutional investors is relatively small in the companies' own industry or the proportion of related transactions to business income is relatively small in the companies' own industry.Based on the findings of our empirical research,this paper comes up some measures to further deepen the reform of integrity at the end of this paper,including strengthening the supervision of entertainment expenses of listed companies in china and other policy recommendations.The results of this paper also supply the empirical research results of the affects of macro governance environment on the structure and the change of cash holding in Chinese companies.