Research On The Impact Of Diversification On Cash Holdings Level And Value Of Enterprises

Diversification and cash holding decisions have always been the focus of the theoretical and practical circles.Studies have shown that diversified businesses have lower levels of cash holdings than specialized businesses.Due to the imperfection of the external capital market,Chinese enterprises also tend to diversify.However,in recent years,due to the occurrence of financial crisis in diversified operations,can diversification continue to exert its advantages and thus reduce the level of cash holdings? There will still be a range effect,that is,when the diversification reaches a certain level,the degree of dependence of the company on cash assets will increase? These issues still need to be further explored.Based on this,this paper takes the data of China's A-share non-financial listed companies in 2008-2017 as a sample,and uses OLS research method to empirically test the impact of different levels of diversification on the cash holding level of enterprises,and analyzes the nature of property rights.The regulatory effect of the management shareholding on the relationship between the two,in the further analysis of the article,examined the cash holding value of the diversified business.Through empirical research,it is found that:(1)In the whole sample,diversification and cash holdings have a “U”-type relationship,that is,moderate diversification can bring business advantages to enterprises and help reduce the dependence of enterprises on cash assets.However,when the diversification has reached a certain level,its drawbacks gradually appear,prompting the company to increase the retention ratio of cash holdings;(2)state-owned enterprises are subject to government policy intervention and credit market support,so that their diversification level is cash The impact of holding level is not significant,and the motivation for private enterprises to use diversified operations to ease financing pressure is obviously stronger than that of state-owned enterprises.The diversified management level and cash holdings have a more significant “U” relationship;(3)In China,the management shareholding will play a synergistic effect of interest,which has a regulatory effect on the “U”-type relationship between diversified operations and cash holding levels,and can enhance the diminishing effect of diversified operations on cash holdings,and will delay The arrival of the U-shaped relationship inflection point and the reduction of the cash holding level at the inflection point;(4)In the further analysis of this paper,the diversification process was found.High enterprise value of cash holdings has declined,from the reflection of excessive diversification will hurt business interests.Based on the above research conclusions,this paper proposes that enterprises should pay attention to the improvement of corporate governance environment in the process of diversification,and increase incentives for management to reduce information asymmetry and agency problems,thereby improving business efficiency;the government should reduce the Intervention in business operations and credit markets to improve the efficiency of social resource allocation.