Research On The Influence Of Accounting Information Comparability On Excess Cash Holdings

As the most liquid asset,cash can maintain the smooth development of the company’s production and operation activities,prevent operational risks and avoid financial distress.However,if managers and major shareholders hold excess cash,it will not only generate a large amount of cash holding costs,but also provide opportunities for agency activities such as on-the-job consumption,over investment and "hollowing out" that damage the enterprise value or interests of small shareholders.In recent years,with the increase of market uncertainty and the aggravation of agency conflict,the excess cash holdings of Listed Companies in China have been increasing year by year.Studies show that the precautionary motivation for preventing financial constraints and the agency motivation for self-interest purposes are the main causes of excess cash holdings.As one of the important characteristics of accounting information quality,accounting information comparability can provide information users with incremental information through signal transmission function and information spillover effect between companies,reduce the degree of internal and external information asymmetry of enterprises,alleviate the two kinds of agency problems in enterprises,and then reduce the excess cash holdings of enterprises.Based on the governance role of the accounting information quality,this paper studies the relationship between the accounting information comparability and excess cash holdings,and finds two impact mechanisms of financial constraints and agency conflicts from inside and outside the company.Finally,it studies the impact of accounting information comparability on the value effect of excess cash holdings.This paper enriches the research on the accounting information quality and cash holdings,provides empirical evidence that the comparability of accounting information affects cash holding,and has certain theoretical significance.At the same time,this paper can strengthen the importance that enterprises place on the quality of information disclosure,alleviate the potential disadvantages of excess cash holdings,thereby increasing the corporate cash holdings and promoting the efficient operation of the capital market.The main content of this paper is divided into six parts: introduction,theoretical basis and literature review,theoretical analysis and research hypothesis,empirical analysis,further research,conclusions and recommendations.The introduction reveals the research background,purpose,and significance of this paper,as well as the overall ideas and research methods established to achieve the research goals.The second part first sorts out the theoretical basis of the accounting information comparability and excess cash holdings;then,sorts out the academic research results on the accounting information comparability,excess cash holdings and the accounting information quality and excess cash holdings,and finally gives summary and comments.The third part first analyzes the possible impact of accounting information comparability on excess cash holdings,and discusses the possible path of the above impact from both internal and external aspects,and then puts forward the research hypothesis of this paper.In the fourth part,firstly,this section selects appropriate research samples,designs research variables and establishes empirical models to test the hypothesis of this paper,analyzes its heterogeneity,and further identifies the internal and external influence paths of enterprises through intermediary effect and group test.At last,we use the instrumental variable method to deal with the endogeneity,and verify the robustness of the research conclusion by means of subsample regression,replacing the key variable measurement index and other methods.The fifth part examines the impact of excess cash holdings on enterprise value and the value effect of accounting information comparability on excess cash holdings,and explains the difference of the effect in enterprises with different property rights.Finally,the sixth part shows the research conclusions,policy recommendations,and deficiencies in this paper.Based on data of China’s A-share listed companies from 2003 to 2018,this paper uses panel data fixed effect models to study the impact and path of accounting information comparability on excess cash holdings.The study finds that:(1)There was a significant negative correlation between the accounting information comparability.(2)After distinguishing the nature of property right,it is found that there is no significant difference between state-owned enterprises and non-state-owned enterprises.When distinguishing different states of excess cash holdings,it is found that the governance role of accounting information comparability is mainly realized by reducing the excess cash holdings above the normal level,rather than by adjusting the excess cash holdings below the normal level.(3)Financial constraints is an external mechanism that the accounting information comparability reduces excess cash holdings.It shows that the accounting information comparability can reduce the asymmetry of information inside and outside the enterprise,alleviate financial constraints,and further reduce the excess cash holding due to preventive motivation.(4)Agency conflict is an internal mechanism that the accounting information comparability suppresses excess cash holdings.To a certain extent,accounting information comparability can ease agency conflicts so that reduce excess cash holdings,but when agency conflicts become excessively serious,management will manipulate accounting policies to directly affect the accounting information comparability and small shareholders will “vote by foot”,thereby inhibiting accounting information comparability from playing a positive role.(5)Further research shows that the excess cash holding has a positive effect on corporate value,indicating that although the prevention motivation and agency motivation are both important reasons for the excess cash holding,the prevention motivation plays a greater role.(6)The accounting information comparability has significantly increased the value of excess cash holdings.After distinguishing the nature of property rights,this effect only occurs in non-state-owned enterprises.The policy implications of the above conclusions are as follows: First,companies should attach importance to the governance effects on the cash holding of accounting information quality,especially the accounting information comparability.Enterprises should strictly follow the rules and regulations,conduct accounting and reporting on economic business truthfully,prevent management from manipulating accounting policies,improve accounting information comparability and then optimize cash management decisions.Second,shareholders should strengthen the assessment of the cash using efficiency by the managers and reduce the agency cost due to free cash flow by formulating more effective compensation incentives and appropriate punishment measures.Third,the capital market should strengthen the protection of the interests of small shareholders from the aspect of cash dividend distribution.On the one hand,they should clearly stipulate the minimum standard of cash dividend distribution and the maximum period of cumulative non distribution of cash dividends.On the other hand,it should implement punishment for the violation of regulations according to relevant laws and regulations to prevent large shareholders from occupying cash assets.Fourth,the government should consider the social and economic goals of state-owned enterprises comprehensively.Also the government should reduce the economic intervention to state-owned enterprises,control the amount of funds allocated,and assess the efficiency of the use of funds regularly to reduce the non efficiency loss of excess cash holding and cash value.