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Influencing Factors of cash holdings in listed companies in China - Based on the characteristics of the corporate governance of listed companies

Author: WangXia From: www.yourpaper.net Posted: 2009-11-23 17:59:10 Read:
[Abstract] cash holdings is an important theoretical and practical issues in the enterprise financial management, not only related to a normal existence, operation and development, and also affect corporate investment, financing and dividends and other financial behavior. Therefore, it is necessary to study this problem. This paper collected deep, Shanghai and Shenzhen A-share listed companies in 2005, the sample data using multiple linear regression test methods, analysis of the impact of cash holdings in listed companies.
[Keywords] cash holdings of corporate governance

Cash holdings plays an important role in the company's financial activities. However, compared to foreign cash holdings of listed companies in China are rather high and is a typical characteristics. So, in the end is what factors affect the level of cash holdings in listed companies in China. For the answer to this question will help to understand the profound impact factors of the cash holdings of listed companies in China and Suggestions for China's listed companies, cash management, and strengthen the level of corporate financial management.

Research design and research process

(A) sample selection and data sources
China's Shanghai and Shenzhen A shares in 2005 as the research sample, excluding the financial sector, the insurance industry and other special industry and incomplete information company. The resulting sample of 968. All sample data from this article (www.stockstar.com).
(B) of the regression model set
This article take the following model
Chashstore = of X1 GjshareX2 GlshareX3 TOPholdsX4 BsizeX5 outbroadsizeX6 CEOshareX7 ln (assets) X8 debtstrX9 growchX10
(C) the descriptive statistics of the main variables
can be seen from the table:
Chinese enterprises an average cash holdings to 5.28%. In comparison, in the high level of cash holdings in line with China's actual situation;
Stake of state-owned shares, the lowest 0 highest 84%, with an average level of 32.44%, indicating that the shareholding proportion of state-owned shares of our country is still very high, due to the dominance of state-owned shares phenomenon significantly;
Highest level of management shares shareholding proportion of 1%, the lowest is 0, the average low, low management stake in China;
The smallest proportion of the largest shareholder of 6.14% for 83.75%, 40.51% average, China's equity distribution is relatively concentrated.
Of board size minimum 4, maximum 19, mean 9.5383, the relatively large size of our board of directors.
The proportion of independent directors, the highest level reached 60%, a minimum of 8%, and the average level of 34.72%, in line with China's actual situation.
View from our chairman of the board and general manager duties separation of variables, China has 89% of the listed companies to implement the duties of the chairman and general manager of separation.
(D) the regression results and analysis
As can be seen from the table, the coefficient of determination of the model was 4.3%, indicating that the goodness of fit of the model is less than ideal. Model F 5.830 and significant at the 1% level of statistical indicated that this model has a certain degree of explanatory power can be used to explain the corporate governance variables affect the level of cash holdings.
National stake cash holdings range negative correlation, but not significant, indicating that the interests of China's state-owned shareholder expropriation listed companies there.
Management stake negatively correlated with cash holdings range.
Largest shareholding ratio is positively related to the amount of shares and cash holdings, but not significantly.
4 board size and the amount of cash held by negative correlation the massive board will lead to inefficient decisions of the Board, and the size of the board of directors over the General Assembly to increase the possibility of collusion of large shareholders and management to be the company's cash holdings a negative impact.
Independent directors with cash holdings range negative correlation, but not significantly, indicating that the independent director system, also play a role in the behavior of the constraint operators, but the effect is less pronounced.
. Chairman and general manager of duality dummy variable cash holdings are related, unity of chairman and CEO, circumvents many of the constraints of the system to increase the manipulation of the rights of the individual, which led to the pursuit of personal gain.
7 control variables, firm size, and corporate cash hold-range negative correlation, large-scale enterprise information to be symmetrical, the smaller the relative difficulty of external financing. The higher the debt structure and cash holdings are positively related to the proportion of current liabilities, the Company held cash more, because companies need to hold cash to avoid financial crisis. The main business revenue is positively correlated with cash holdings range, and significant statistical When a company needs more cash reserves for high growth.
Conclusion revelation
National shareholders also exist with the more serious agency problems, shareholders "due to the dominance of state-owned shareholders of the background and national stake, it is difficult to form an effective checks and balances and oversight. Provide evidence to support the split share.
The massive board will lead to inefficient decisions of the Board to be the firm's cash holdings have a negative impact. Therefore, to streamline the management structure, improve the quality of management will help improve the company's performance.
Study independent directors with cash holdings range negative correlation, but it is not obvious, the description of the independent director system in China still need further improvement to really play a role in supervision and restraint.
Further promote the reform of the split share structure and reduce the amount of state-owned shares, reducing the government and the economy in the interests of the degree of association, the real implementation of the rule-making role of the market economy, the government. Streamlining the size of the board structure, and improve the efficiency of board decisions. Further improve the system of independent directors, the independent director system can really play the role of supervision and restraint in the economic operation.

[1] Xing-full, Sun Jie. Corporate cash holdings: A Literature Review and Enlightenment Contemporary Finance, 2006,9.
[2] in East Chi, Hu, Liu, Wang into corporate cash holding decision-making and corporate governance analysis. Financial Theory and Practice, 2006,4.
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