| China has persistently promoted opening up to the outside world in recent years,guiding foreign investors and foreign investment institutions to actively participate in the Chinese market.With China steadily opening up its capital market to the outside world,guiding and further developing and improving the Qualified Foreign Institutional Investor(QFII)management system,QFII has gradually played an important role in China’s securities market.As the most liquid asset,cash has an important impact on the survival and development of companies.How companies can hold cash more rationally and scientifically,and improve the efficiency of cash allocation,so as to serve the value increase of the company has been much discussed.Therefore,based on this reality,this paper explores the possible impact of QFII,an external governance force,on companies’ cash holdings(level of cash holdings and value of cash holdings)and makes relevant policy recommendations.This paper takes Chinese A-share listed companies from 2008 to 2020 as samples to empirically analyze the impact of QFII on corporate cash holdings and explore the influence mechanism between the two.Furthermore,the influence of QFII on corporate cash holdings is further studied under different internal environments(financing constraints,separation of rights and management power)and external environments(marketization level,product market competition and auditor reputation).The research conclusions of this paper are as follows :(1)the higher the proportion of QFII holding,the higher the level and value of cash holding,indicating that QFII holding can play a supervisory role in China’s listed companies and improve the efficiency of cash use;(2)The improvement effect of QFII on the company’s cash holding level and value is mainly driven by QFII from countries(regions)with high regulatory quality and QFII that are the top ten shareholders of listed companies.QFII from countries(regions)with high regulatory quality and QFII which are the top ten shareholders of listed companies have a more obvious effect on the improvement of cash holding level and value of the company;(3)The mechanism analysis shows that QFII promotes the improvement of corporate cash holding level and value through the information effect channel(media attention)and corporate governance channel(internal control quality).Media attention and internal control quality are the information effect channel and corporate governance channel of QFII.(4)Under different internal environments of the company,QFII affects cash holdings to different degrees.The positive effects of QFII on cash holding level and value are more significant with higher financing constraints,higher separation of ownership and control and less management power.(5)The difference of the company’s external environment affects the effect intensity of QFII on the company’s cash holdings.The higher the marketization level is,the fiercer the product market competition is and the higher the auditor reputation is,the more QFII can promote the company’s cash holding level and cash holding value.In view of the research conclusions,this paper puts forward the following suggestions: The government should steadily expand the QFII investment team,increase the proportion of investment,establish relevant mechanisms to encourage QFII long-term shareholding and actively participate in corporate governance,and constantly improve relevant laws to strengthen the supervision of QFII;For the company,it should strive to improve the long-term value of the company,attract QFII investment,establish an effective governance mechanism,and make reasonable cash holding decisions based on its own situation.This paper not only expands the research perspective of corporate cash holding,but also enricifies the related research on QFII’s participation in the governance of Chinese listed companies,providing empirical evidence for China’s opening up of capital market and the introduction of QFII shareholding in listed companies. |
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