Analysis Of Excess Cash Holding,Stock Liquidity And Their Impact On Corporate Value

In recent years,more and more companies have held more cash,and the "cash is king" theory has been highly praised.Scholars at home and abroad have made a detailed analysis of the factors affecting excess cash holdings by various theories.At the same time,the economic consequences of the company’s excess cash holdings have also been studied in many aspects.Stock liquidity is the micro-market performance of the company’s stock.There is a certain relationship between the liquidity of corporate assets and stock liquidity.So,does excess cash,as the most liquid part of the asset,have an impact on the micro-market performance of the company’s stock? More importantly,does corporate stock liquidity play a role in the relationship between excess cash holding and corporate value? In order to solve these problems,this paper will discuss the problems related to excess cash holding in depth.This paper takes a sample of A-shares listed companies in Shanghai Stock Exchange and Shenzhen Main Board and GEM in 2013-2016.Firstly,we study the relationship between excess cash holdings and corporate value,and then empirically study the effect of excess cash holdings on stock liquidity.Finally,stock liquidity is added into the analysis of the impact of excess cash holdings on company value to empirically test whether stock liquidity has an impact on the relationship between the two and the impact mechanism.In order to better study and analyze China’s stock market,this paper makes a comparative analysis between gem samples and total samples.Research indicates: Excess cash holdings are significantly negatively correlated with company value,that is,excess cash holdings will reduce company value;Excess cash holdings are significant positively correlated with stock liquidity,that is,excess cash holdings will improve stock liquidity,which is more significant in gem companies.After adding the stock liquidity factor into the analysis model of excess cash holding and company value,further research found that higher stock liquidity aggravated the degree of excess cash holdings reducing the company value,but in GEM companies,this effect was not significant.The research in this paper proves the positive effect of excess cash holdings on stock liquidity,and the role of stock liquidity in excess cash holding on corporate value,which has corresponding practical significance in improving stock liquidity,corporate cash management system and corporate value.