Empircal Study On The Interactive Relation Between Cash Holdings And Corporate Performance Of Lisied Companies

In modern companies, the daily management of cash holdings has become animportant part of enterprise management. With the development of financial managementtheory, relative research on cash holdings has attracted more and more concern in theoryand practice. Influencing factors of cash holdings and the influence on the corporateperformance has become research focus in recent academic field. Continuous enrichmentand development of theory achievements has important significance to guide the decisionof cash holdings. Most of the researches on cash holdings focus on cash holdings'influencing factors. There are two research directions. One is the view of financialcharacteristic, the other is the view of corporate governance. The research on corporateperformance's influencing factors is also from the two directions. The research method ofrelative studies is relatively single. Most analyze cash holdings and corporateperformance with multiple regression model. Based on the analysis above the paperanalyzes the relation between cash holdings and corporate performance withsimultaneous equations model. The paper makes a new attempt on relative research.Firstly, this paper systematically summarizes present research situation of cashholdings'influencing factors and analyzes the relation between cash holdings andcorporate performance. Three basic theories form theoretical basis and suppliestheoretical support and guidance. Secondly, the research dataset consists of the financialinformation of the Chinese manufacturing industry listed companies from the year of2007 to 2009 considering the influence of financial characteristics and corporategovernance on cash holdings and corporate performance. The paper screens variableswith stepwise regression. The paper establishes the regression equation of corporateperformance influencing cash holdings and the regression equation of cash holdingsinfluencing corporate performance with simultaneous equations model. The paperexplains and analyzes regression equation coefficient. There is positive interactiverelation between cash holdings and corporate performance. The paper analyzes the idealcash holdings. In final, the paper put forward some suggestions on the positive interactiverelation between the cash holdings and corporate performance. The paper has guidingsignificance for the decision on cash holdings.