Research On The Influence Of Group Finance Companies On The Cash Holdings And Value Of Listed Companies:Efficiency Promotion Or Value Depreciation?

In recent years,more and more group companies have established internal financial companies to build internal capital markets.With the substantial increase in the number of financial companies established and the rapid expansion of the scale of assets,the types of related transactions between member listed companies and group financial companies have become more diversified and occur more frequently.The effectiveness of financial company’s related service functions plays an important role in the efficient operation of member units.The original intention of the establishment of the financial company was to provide member companies with more convenient and preferential financial services,and to become a superiority for the efficiency and value of corporate funds.However,it has been observed that the existence of agency problems often results in the effectiveness of financial companies’ financial services being restricted by the will of the controlling shareholders,and may eventually become a "green channel" occupied by controlling shareholders’funds.There is a high probability that the internal capital market with financial companies as the medium will be dissimilated into a way for major shareholders to "tunnel".Cash management plays a vital role in the process of maintaining normal daily operations and seeking stable and long-term development,especially when the company resists external crises.Cash is also an important intermediary for the allocation of resources in the internal capital market.The effectiveness of the use of corporate funds fully reflects the efficiency of resource allocation within the group.Therefore,this article selects the relationship between the financial company,an important means of group financial management and control,and the cash holding behavior of member listed companies as the research object,and explores the effects of financial company related transactions.This paper uses my country’s A-share listed companies from 2008 to 2019 as a research sample to systematically examine the impact of related transactions between group financial companies and member listed companies on listed companies’cash holdings.This paper finds through empirical research that under the leadership of agency motivation,compared with listed companies that have not had related transactions with financial companies,listed companies that have related transactions with financial companies have significantly higher cash holdings and significantly lower of the value of cash holdings.In addition,the analysis of the intermediary effect found that the intensification of underinvestment is a part of the intermediary that has caused a negative impact on the value of cash holdings of listed companies by financial company related transactions.The research in this article has sounded the alarm for rationally regulating the financial services of financial companies,especially strengthening the supervision of the deposit and loan services of related parties of financial companies,improving corporate governance and protecting the interests of small and medium investors.