An Empirical Study On The Effect Of The Listed Companies' Corporate Governance Structure In China On The Cash Holdings

The aim of this paper is to investigate the empirical influence of the corporate structure on the corporate cash holdings for a sample of Chinese listed companies. By means of empirical study, we expect to contribute to the research of this field and provide some theoretical references to the reformation of corporations'systems.By means of careful research in correlative literature and integrating with the listed companies'facts, we found out some important factors that can reflect the characters of the corporation structures of the listed companies (i.e. managerial ownership, board structure of companies, controlling shareholders and the actual controllers, and the policy of cash dividend). Simultaneity, by learning from the conclusion of the correlative studies, we also use some other factors, out of the corporation structure, that have been confirmed to have effects on the cash holdings (size of the firms, growth opportunities, liquidity constraints and cash substitutions), to promote the analysis. And then, after the basically logical analysis, the hypotheses are put forward. After that, we can make our empirical analysis with a great number of data of our sample (including the panel data). In our paper, by using the Eviews5.0 to continue our estimation, we can operate our analysis in two ways: to analyze the effects of the corporate structure on the cash holdings, we use the general regressions; and to analyze the panel data, we proceed to motivate the dynamic model, and employ the GMM method of estimation. The result shows that the ownership of the actual controllers can affect the cash holdings significantly, especially when the actual controllers are state-owned units. In addition, the effect of the managerial ownership on the cash holdings is not monotonic. The trend, that the cash holdings would be decreasing while the managerial ownership are increasing, depends on the current level of managerial ownership. As well, it should be noted that, in the companies with greater growth opportunities, the managerial ownership will influence the cash holdings more significantly. At last, the policy of cash dividend has a positive effect on the cash holdings. Utile now, we haven't found out any theoretical support on the phenomenon yet.In order to establish a better cash holdings policy, the paper provides some advices about how to improve the ownership structure of company, including the suggestion with the promotion of the board structure and improvement on the mechanism of the promotion and restriction to the managers. The reason is that the cash is a special capital...