Research On The Impact Of Corporate Strategy On Cash Holdings

Since Keynes proposed in 1936 that companies hold cash for trading motives,preventive motives,and speculative motives,scholars have conducted a large number of empirical studies and theoretical explanations on cash holding motives,gradually enriching and perfecting the theory of cash holding motives.In the 2008 financial crisis,many companies failed to operate due to insufficient cash holdings,while others gained more development opportunities due to abundant cash reserves.Under the background of the global financial crisis,the decision-making problem of corporate cash holding level faces new requirements,and it also provides a new opportunity for the study of corporate cash holding level.Cash is the lifeblood of a company’s development.The rationality of cash holding decisions is related to whether the company can achieve good development.Throughout the current theoretical research on cash holdings,scholars mostly study the factors affecting cash holdings from the external level of economic policy uncertainty and product market competition,as well as internal characteristics such as corporate characteristics and corporate governance.However,it ignores the impact of the choice of corporate strategy on the level of cash holdings,and lacks an in-depth analysis of the role of corporate strategic aggressiveness in cash holdings.Enterprises with different strategic processes have different risks and information asymmetry and internal governance mechanisms.Based on cautious motives and agency motives,companies will choose different cash holding strategies.Financing constraints can reflect the risks faced by enterprises to a certain extent.Management power can affect the agency costs brought about by the separation of ownership and management rights.Therefore,the difference between financing constraints and management power can affect the strategic progress of enterprises and cash holdings.There is a relationship between the two levels.Based on the existing relevant literature,this paper selects and organizes the A-share data of listed companies in the 9-year period from 2009 to 2017(excluding the financial insurance industry),and uses the method of multiple linear regression to test the strategic aggressiveness of the enterprise.The relationship between the level of cash holdings and the difference between financing constraints and management powers are further differentiated.The empirical findings:the strategic progress of the enterprise can affect the level of cash holdings,the more aggressive the strategy,the higher the level of corporate cash holdings;the positive impact of corporate strategic aggressiveness on the level of cash holdings in enterprises with high financing constraints and high management power more obvious.The research on the impact of corporate strategy on the level of cash holdings has expanded the existing research scope,enriched relevant theories and literature,and has a certain degree of academic significance.And the research of this paper is conducive to a comprehensive understanding of the intrinsic significance and value of the cash held by enterprises,and then provides effective guarantee and reference for enterprises to adopt effective and reasonable management and financial decisions,reduce the degree of information asymmetry and improve the internal control mechanism.