Analysis Of The Causes And Effects Of Excess Cash Holdings From The Perspective Of Agency Theory

China's listed companies currently hold excess cash.Why do listed companies hold so much excess cash.Why do listed companies hold a large amount of excess cash and what impact will it have,how to make better use of cash from an enterprise perspective,and how to better strengthen the supervision and management of cash from a macro perspective.This article uses Luzhou Laojiao as a case to explore.It is found that from the current situation of Luzhou Laojiao,only agency theory can explain the reasons for excess cash holdings,and further explore the impact behind it from the perspective of agency theory.The status quo of excess cash holding mainly includes vertical analysis of cash holding status and horizontal comparison of similar companies' cash holdings.Through comparison,it is found that excess liquor holdings are common in liquor companies,and this phenomenon is prominent in Luzhou Laojiao.Later,we measured the excess cash holdings in Luzhou Laojiao.For the existence of excess cash in Luzhou Laojiao,this article uses five methods to make quantitative measurements to determine whether the phenomenon of excess cash holding in Luzhou Laojiao does exist.Part of the reasons for excess cash holdings This article attempts to explain the reasons for excess cash holdings based on traditional theories.It is found that the agency theory can partially explain the motivation of excess cash holdings in Luzhou Laojiao.The order financing theory and financing constraints are contrary.The cash income on Luzhou Laojiao's account is lower than the financing cost and opportunity cost,which is contrary to the traditional trade-off theory;the abundant cash on the account,but the choice of external financing is contrary to the theory of superior financing;and Luzhou Laojiao does not have financing constraints,Financing constraints motivate holding excess cash.Then from the perspective of agency theory,what impact will a large amount of excess cash have on a listed company? The main manifestations of agency problems include excessive on-the-job consumption and excessive investment.Through analysis of Luzhou Laojiao,we find that the increase in agency costs can be reflected from the side.It is possible that the excessive consumption of Luzhou Laojiao and the excessive investment of Luzhou Laojiao are reflected in the fact that Luzhou Laojiao invests excess cash in projects that are not conducive to the development of the main business or even loss,and on the other hand is reflected in excess cash The benefits of even failing to cover costs are much lower than their opportunity costs.Finally,suggestions are made on how to use excess cash from a micro perspective,and suggestions on how to monitor the use of excess cash from a macro perspective.