The Impact Of Equity Heterogeneity On Corporate Cash Holding Value Under Financing Constraints

Since the reform and opening up,China's economic development has achieved world-renowned achievements.Undoubtedly,efficient investment activities are the main driving force for economic growth.But in recent years,China's overall investment efficiency is still at a relatively low level.Among the many factors that affect investment efficiency,the value effect of cash holdings has always been one of the hot topics studied by scholars.This article uses the financial data of China and Shanghai A-share listed companies from 2005 to 2018 as a sample to empirically examine the value effect of cash holdings of listed companies in China under the constraints of financing,and explore the impact of the nature of equity and the concentration of equity on it.The study found that the value effect of cash holdings of listed companies in China is positive,and financing constraints have a significant strengthening effect on the value of cash holdings of companies.This is because the actual capital market is imperfect,and factors such as information asymmetry and agency problems have caused external financing costs to be significantly higher than internal financing costs under financing constraints.Therefore,more cash holdings can more effectively promote financing-constrained companies to invest,reduce the problem of insufficient investment caused by excessive external financing costs,and increase the value of the company.It follows that the cash holding value of financing-constrained companies is significantly higher than that of non-financial-constrained companies.At the same time,the research in this paper also finds that the value effect of cash holdings of state-owned enterprises is lower than that of non-state-owned enterprises due to the easing effect of government-related ties on financing constraints.In reality,due to differences in external financing capabilities between different equity companies,non-state holding companies face more serious financing constraints.State-owned holding companies with good government relations have better external financing channels and therefore face smaller financing constraints.Non-state-owned holding companies are more difficult to obtain external funds,face more stringent financing conditions and higher financing costs.From the perspective of financing constraints,non-state holding companies tend to hold more cash,and their cash holding value is also significantly higher than that of state-owned enterprises.Finally,from the perspective of equity structure,this paper finds that under the condition of financing constraints,the effect of equity concentration on the value of corporate cash holdings is non-linear and presents an inverted U-shaped structure.Different ownership structure arrangements show different principal-agent relationships,and the resulting agency conflicts will aggravate or reduce the financing costs and financing capabilities of enterprises,and form different performances of financing constraints.In other words,with the gradual increase in the concentration of equity,the controlling shareholder 's motivation and ability to monitor managers have increased(Shleifer & Vishny,1986),the first type of agency problems facing the company has begun to weaken,thereby weakening the degree of financing constraints.However,with the further increase in the concentration of equity,the second type of agency problems began to emerge,and major shareholders began to use their powers to facilitate the appropriation of the interests of small shareholders,thereby strengthening the financing constraints faced by enterprises.It can be inferred from this that the concentration degree of the company's equity and the company's cash holding value is not a simple linear relationship,but shows an inverted U-shaped correlation.