A Study On Governance Environment、Cash Holdings And Corporate Value Relationships

"Cash is king" has been the most respected financial manager of golden laws and precious rules.On the one hand,because of the needs of daily company operation and investment activities,holding full cash can meet the needs of rapid implementation of enterprise development strategy decision,which also can reduce the high cost of external financing;On the other hand,holding full cash flow can deliver signals to the outside world by raising cash dividends or repurchasing shares held by shareholders,and enhancing investor confidence.Therefore,in the listed companies,the decision-making of cash holdings has been in the middle position.Although cash liquidity can bring many benefits,but cash is the lowest income assets,excessive cash holdings will greatly increase the opportunity cost and agency theory and free cash hypothesis that managers hold more cash in order to seek personal gain,which will damage the value of the company.Our country has a variety of historical reasons and unique national conditions,for China’s listed companies,there are huge differences in their government supervision and management,judicial process construction,marketization and rule of law.Therefore,there are differences in the market governance environment in different regions of China.Especially,the marketization process and the level of rule of law in different regions will make the protection of investors,rights and interests different in different regions.Therefore,it is very meaningful to study the amount of cash holdings of the listed companies and the relationship between the value of the company in different governance environments.Therefore,in order to explore the governance environment of different areas of the holding amount and corporate value of the listed company’s cash,we selected the cash holdings and company value data from 2012 to 2016 financial data of listed companies,according to Fang Gang and Wang Xiaolu(2016)the market index of each area report,to replace the environment index from the refined sub index.From the results of the study,it can be seen that the governance environment will affect the level of the amount of cash holdings of listed companies.In a better environment,market supervision system is more stringent,which will effectively reduce agency cost theory.Investors will be more trusting of company managers and rest assured that companies hold more cash volume.Meanwhile,there is a positive correlation between governance environment and company value.Good governance environment can provide good market support,and companies can also make full use of cash holdings,thereby increasing company value.According to the environmental index for the grouping of variables,can be seen in the poor governance environment of listed companies because of the interests of investors cannot be effectively protected will choose to hold less cash,but this significant correlation in the non-government controlled listed companies is more obvious.