Impact Of Cash Holdings On Company’s Growth Performance Under Large Shareholders Controlling

In the current economic situation, the development of SMEs has become a major force in China’s economic development, while government is also mading various policies to support the development of SMEs. Nevertheless, some problems which plagued the development of SMEs have not been effectively addressed, such as small and medium enterprises financing difficulties, shortage of human resources, corporate governance structure is imperfect and so on. Based on this background, this paper focusing on the level of corporate governance researches from the SME cash holdings, including the factors of influencing cash holdings and cash holdings affecting on the company’s growth performance. We hope that some problems can be found in small and medium companies governance, and hope that we can help improve the corporate governance of SMEs.This overall structure is as follows:The first part of the introduction. Mainly describe the research background, significance, literature review, and then explain the research methods, research ideas and research frameworks, but also pointed out that this innovation may exist.The second part of the theoretical analysis and the assumptions made. First, the concept of the cash holdings, the best level of cash holdings and cash holding level of deviation is defined. Secondly, theoretically analysis how the factors of controlling shareholders affect on the level of cash holdings as well as how the level of cash holding influences the development of SMEs, and then this paper presents the seven assumptions.The third part of the research design. Firstly,we design the model which can estimate the deviation of cash holdings and define the variable; and then as the dependent variable, set the model of controlling shareholders affecting the deviation of cash holdings, and define the variables; finally study the relationship between cash holdings and the company’s growth performanceThe fourth part of the empirical research. In this section,mainly based on collected data meeting the conditions, to be descriptive statistical analysis, correlation analysis, and multiple regression analysis.And then in order to make the study have universal significance, we expand the sample data and make robustness tests.The fifth part is the study findings and limitations of the study.Innovation of this paper in the following points:First, focusing on corporate cash holdings deviation which is the difference between their actual holdings with the theoretical, the paper studies the dynamic growth of the enterprise performance research. Second, most studies are based on all listed companies as the research object, but Enterprises of different industries and sizes have different characteristics, they face different market environment and different institutional environment,so cannot be generalized. This paper selected as samples for SMEs to make research more targeted. Third, the data selection is timely. This paper samples and data are selected from the Shenzhen Stock Exchange data for2008-2012. Compared with the existing research results, the paper reflects the timeliness of the data selection.Through empirical study we found, that the proportion of the largest shareholder and the deviation of cash holdings shows significantly positive correlation, but also in areas of high market process, this correlation will be weakened; equity balance degree deviation with cash holdings shows significantly negatively correlation. In the study of growth performance, we found that the deviation of cash holdings and the company’s growth performance shows significantly positively correlated, Excess cash holding would have a greater impact on the company’s growth performance;while the controlling shareholder would negatively influence the relationship between the level of cash holdings and the company’s growth performance.