Internal Governance And Level Of Cash Holdings

The company's financial decision-making is affected by many complex factors,which has been an important topic in the academic research.As an important part of liquidity management,cash holding level is also a big problem in financial circles.At the end of 1990s,the cash holding level of many western enterprises increased rapidly,which attracted the attention of financial scholars,and carried out in-depth research on the determinants of the company's cash holding level.In China,the cash holding level of most listed companies is on the rise as a whole,and some scholars have also carried out relevant research.Why do domestic listed companies maintain a high level of cash holdings,and what factors affect cash holdings?Does higher cash holding level increase company value or damage company value?These problems deserve further study.In this paper,theoretical analysis and empirical test are combined,from the perspective of internal governance of the senior management team as the starting point,to study the main factors that affect the cash holding level.Using the financial statement data of Shanghai and Shenzhen listed companies from 2010 to 2017,a total of 12977 samples,using the mixed data model to analyze how the internal governance of the senior management team affects the company's cash holding level.The results show that:(1)there is a significant positive correlation between the internal governance of the senior management team and the cash holding level of the enterprise,that is,the better the internal governance level of the senior management team is,the higher the cash holding level of the enterprise is.(2)when the internal governance level of the senior management team is high,the higher the market value of the cash holding is,indicating that the supervision of the subordinate senior managers on the CEO's operation and management behavior promotes the enterprise vallue Ascension.(3)This paper finds that in the companies with low proportion of the largest shareholder and low marketization process,the internal governance of senior management team has a more significant positive impact on cash holding.The main innovations of this paper include:This study enriches the relevant research of cash holding,changes the subject of corporate governance from "external"to "internal" of the senior management team,and expands the research boundary of corporate governance.In this paper,first of all,we should strengthen the internal governance of the company,alleviate the agency conflict,optimize the ownership structure of the company,pay attention to improving the proportion of shareholders'shares,and improve the governance environment.