The Effect Of Listing To Cash Holdings:Insights From Unlisted Firms

This paper conducts an empirical study of listed companies and unlisted companies in the 1998-2013 periods to study the effect of listing to cash holdings,using matching analysis and OLS multiple regression.Listing reduces the degree of information asymmetry faced with the company,thereby reducing the company's cash holdings.And listing also eases equity agency costs between the managers and shareholders,which also lower cash holdings.However,due to the introduction of new shareholders,serious agency problem of control led to an increase in cash holdings.On the whole,listed companies' cash holding level is lower than that of unlisted companies,listing makes the company's cash holdings decrease,that is to say,the increase in cash holding causes by new agency cost of control is less than the effect brings by information asymmetry and equity agents conflict.This paper further explores the source of cash increased by new agency cost of control and the way to use it.It is found that compared with unlisted companies,the investment implemented by listed companies is significantly much less.And the cash accumulated is transferred by the actual controller through related transactions,which satisfy their personal interests.