| Cash holdings is an important financial decision and has been widely concerned by the academic and practical scholars.Cash is a highly liquid asset.Holding an appropriate amount of cash can help enterprises effectively resist risks and improve operational flexibility and convey a good signal of the stable operation of enterprises to investors.However,high cash holdings will lead to higher holding and opportunity costs and provide manipulative opportunities for shareholders and managers,who may arbitrarily consume cash in order to maximize their own interests,resulting in low efficiency of cash allocation.Therefore,cash management is importance to enterprises.In recent years,media’s transmissibility and effect have been greatly enhanced and they have played an important function on improving corporate governance and protecting investors’ interests with the rapid development of information technology.Negative media coverage accelerates the disclosure of negative information about companies and causes negative reactions from investors and the attention of regulators.Existing research on the factors influencing corporate cash holdings mostly from the external macro environment and internal micro characteristics,while the external macro environment pays more attention to the formal systems such as legal system and market policy,and rarely studies pay attention to the external informal systems such as negative media coverage.If we can identify the influence mechanism of negative media coverage on the cash holdings and deeply analyze the function mechanism of negative media coverage in improving the corporate governance,it will certainly be beneficial to the capital market.Based on this,this paper selects A-share listed companies in Shanghai and Shenzhen of from 2009 to 2021.Based on financing constraint theory,principal-agent theory,reputation theory,multiple linear regression method is adopted.This paper examines the influence of negative media coverage on the company’s cash holdings and the mediating role of financing constraint and overinvestment.Furthermore,the property rights and the firm’s life cycle are examined.In order to make the results more robust,this paper solved the endogeneity problem caused by reciprocal causation and tested the robustness of the research hypothesis by replacing the measurement method of core variables and removing samples of COVID-19 in 2020 and 2021.This study finds that negative media coverage can significantly improve a company’s cash holdings,because negative media coverage can accelerate the disclosure of negative news and trigger the attention and actions of stakeholders.Mechanism analysis result shows that negative information transmitted by negative media coverage increases the difficulty and cost of external financing of the company.In order to ensure normal production and operation activities,the company is forced to increase the level of internal cash holdings.In addition,the further analysis of this paper finds that the negative media coverage in state-owned companies have a stronger effect on cash holdings because of the more serious consequences of agency problems and reputation damage.As enterprises in the growth stage and mature stage receive more media coverage,companies in these two stages are more affected by negative media coverage on their cash holdings.After solving the endogeneity problem and conducting a series of robustness tests,the results are still robust.From the perspective of external informal systems and on the basis of distinguishing the nature of media coverage,this paper discusses the influence of negative media coverage on the cash holdings and the mechanism,theoretically enriching the research literature on the effect of negative media coverage and the influencing factors of cash holdings.In addition,the conclusions of this paper practically emphasize the negative media coverage’s governance function,strengthen corporate reputation management and improve cash allocation efficiency. |
PDF Full Text Request