| Cash holdings is a major problem which managers faced in the company management, although the company's cash holdings is finally decided by the managers in the decision of Board of Directors, the amount of cash holdings of the company is more affected by the corporate governance structure. This paper attempts to study how the factors of listed company governance structure affect the cash holdings of the company, and based on the results of the empirical study, I put forward some suggestions on improving listed company governance structure in order to control the amount of cash holdings of the company.In this paper, I collected the research data from 2007 to 2009 for a sample of 998 listed companies which have completed the dual-class equity structure reform by the end of 2006, and study how the company's cash holdings affected by the listed company governance structure, which including the ownership structure, the ratio of management buyout, the characters of board of directors, and the degree of the shareholder's protection. Conclusions of this study show that the proportion of tradable A shares, the ownership concentration (the proportion of the largest shareholder) and the board size all has a significant negative correlation with the cash holdings. The proportion of managerial ownership, the degree of protection of shareholder rights has a significant positive correlation with the cash holdings. The proportion of state-owned shares and legal person shares all has a positive correlation with the cash holdings, but not significant. The proportion of independent directors has a negative correlation with the cash holdings, but not significant too. Through the analysis of the research results, I found that in order to strengthen the management of the cash holdings, we should improve the governance structure of listed companies from the ownership structure, the independent director system, executive incentive and legal protection. |
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