Research On The Regulating Effect Of Cash Holdings On Risk-taking Value-added Process

Under the background of the new era of economic transformation and development in China,economic and social development guided by scientific and technological innovation is becoming the basic driving force for the future growth of enterprises and the sustainable development of national economy.In this process,it is becoming more and more important to keep creating company value through corporate risk-taking.However,how to better balance the agency conflict and the rational allocation of resource advantages within the company is an important issue to be solved in the company management decision-making.A large number of domestic and foreign literatures on risk-taking mainly focus on its influencing factors and economic consequences.There is a basic consensus that risk-taking can improve corporate value.However,there is still a blank in the research to refine the value-added channel and mechanism of corporate risk-taking and the regulatory factors of its process.Based on the panel data of Shanghai and Shenzhen A-share listed companies from 2008 to 2016,this paper analyzes the value-added channel and mechanism of corporate risk-taking,and empirically studies the effect of cash holdings as a regulating factor on the value-added process of corporate risk-taking from the perspective of the first type of agency problems,and the difference of this regulating effect under different levels of cash holdings.This paper draws the following conclusions:(1)The increase of corporate risk-taking will raise the level of the first type of agency problems,and the increase of agency cost will weaken the value-added effect of corporate risk-taking.(2)Cash holdings may reflect the cost of the first type of agency problems and weaken the value-added effect of corporate risk-taking.They may also reflect the internal resources of the company and thus positively regulate the value-added effect of corporate risk-taking.Empirical tests show that cash holdings,as a regulating factor,weaken the value-added effect of corporate risk-taking mainly through the first type of agency problems channel.(3)The low level cash holdings whose internal financing advantage is higher than its cost of the first type of agent problems,are the main reflection of the internal resources of the company.The weakening effect on the risk-taking value-added process is not significant,and it shows favorable economic consequences of the internal financing advantage.High level cash holdings whose internal financing advantage is lower than its cost of the first type of agency problems,mainly reflects the cost of the first type of agency problems.The weakening effect on the risk-taking value-added process is significant,Unlike previous literatures,which mainly focus on the direct impacts of cash holdings on corporate value,this paper puts cash holdings as a regulating factor into the analysis framework of economic consequences of risk-taking for the first time,studies the regulating role and mechanism of cash holdings in the risk-taking value-added process,and expands the research horizon of the impact of corporate decisions on cash holdings and risk-taking.This paper investigates the trade-off between internal financing advantages and agency costs under different cash holdings and the differences in the economic consequences of risk-taking.It provides an important basis for people to understand the interaction between complex resource environment and governance conditions in the process of corporate value creation.In the process of management decision-making,the conclusion of this paper has practical significance on how to effectively allocate cash resources and build a reasonable combination of risk-taking and cash holdings.