State Holding And Legal Person Shares Of The Company's Cash Holdings

Cash is the most liquid assets, which plays an important role in the company finance. In recent years, given the importance and the practical significance of the issue, the international academic community have dose a lot of deals about this issue, and formed a series of very fruitful research results.From the level of cash holdings and the value of cash holdings, this he paper examined the corporate governance characters of state-owned controlling and legal persons' stock holding and their interactive effect on the cash holdings. Based on previous studies, this paper derived the internal relations of the type of holding company, external regulation and the value of company by deductive logic modus. Then, combined with relevant literature and the special situation of China's capital market, this study proposed it's hypothesis. Secondly, based on 2004 -2007 data of China's A share market, this paper improved the previous model of the cash holdings, and validated the proposed hypothesis by empirical analysis.The study found that: 1) the legal person shares was significantly higher in the non-state-owned holding company that state-owned holding company, so as to the level and the value of cash holdings; 2) the value of cash holdings and the level of cash holdings significantly shaped a inverted "U" relationship, but futher analysis showed that the significantly relastionship only found in the non-state-owned holding company, while in the state-owned holding company, the relasitonship on shaped the left side of the inverted "U"; 3) with a higher proportion of corporate shares, the level and the value of cash holdings in the non-state-owned holding company's decreased significantly, while the state-owned holding company did not change significantly. The results show that institutional ownership is conducive to the improvement of corporate governance, but the positive role of corporate equity in state-owned holding company is limited. Finally, based on the logic of this analysis and empirical research, combined with the special nature of capital markets, cash holdings from the perspective of corporate governance proposed to increase the number of recommendations to contribute to our corporate governance theory and practice of further development.