Research On The Influence Of Internal Capital Market Operation On The Adjustment Of Enterprise Cash Holdings

Cash management decisions of enterprises are crucial to the development of enterprises.Too low cash holding level is likely to lead to capital shortage of enterprises,while too high cash holding level may lead to resource waste.At present,many scholars have confirmed that enterprises have an optimal cash holding level.The dynamic tradeoff theory points out that when the internal and external environment of changes,so does the optimal level of cash holdings,so how to accelerate the adjustment of cash holdings is essential for the development of the company.With the development and growth of diversified enterprises,enterprise groups have emerged.By operating internal capital markets,group headquarters can rationally deploy resources,alleviate the financing constraints faced by member enterprises and raise the effectiveness of resource allocation,which has a certain impact on enterprise liquidity management.However,with the deepening of the control degree of major shareholders,the agency problem of enterprise groups may become more serious,major shareholders will use the operation of the internal capital market to hollow out the interests of minority shareholders,which is detrimental to the management of corporate liquidity.Based on the above background,this paper makes a theoretical analysis of the relationship between the operation of internal capital market and the adjustment of cash holdings.First of all,this paper analyzes the influence mechanism of internal capital market operation on the adjustment of cash holding.Secondly,from the perspective of financing constraints,asset liquidity and marginal rate of return on capital,the transmission path of internal capital market operation affecting the adjustment of cash holdings is analysed.Afterwards,the concentration of ownership is added as a moderating variable to analyze its influence on the relationship between the operation of internal capital market and the adjustment of cash holdings.Based on the theoretical analysis,this paper selects the data of non-financial listed enterprises in Shanghai and Shenzhen A-shares in China from 2012 to 2021 as the initial sample,determines the member enterprises within the group by tracing the actual controller,and the main regression model,the moderating effect model and the intermediary model are set up for empirical analysis to verify the theoretical hypothesis using the systematic GMM estimation method,and the grouping regression was used to test the heterogeneity.The results indicate that:(1)Internal capital market operations can accelerate the adjustment of corporate cash holdings;(2)The increase in equity concentration negatively moderates the impact of internal capital market operations on the adjustment of corporate cash holdings to a certain extent;(3)Financing constraints play a mediating effect in the influence of internal capital market operation on the adjustment of corporate cash holdings,which means that the operation of the internal capital market can ease financing constraints and thus accelerate the adjustment of corporate cash holdings;Asset liquidity plays an intermediary role in the internal capital market operation’s influence on the adjustment of corporate cash holding level,which means that the operation of the internal capital market can improve asset liquidity and thus accelerate the adjustment of corporate cash holdings;Marginal rate of return on capital plays an intermediary role in the influence of internal capital market operation on the adjustment of cash holding level of enterprises,which means that the operation of the internal capital market can increase marginal rate of return on capital and thus accelerate the adjustment of corporate cash holdings;(4)Compared to SOEs,internal capital market operations cause non-SOEs to adjust their cash holdings more rapidly;Compared with large-scale firms,the operation of internal capital market will make small-scale firms adjust their cash holdings faster.Finally,in accordance with the above results and studies,this paper proposes the following four recommendations:first,facilitate the constructing of enterprise groups and strengthen the operation of internal capital market;Second,strengthen enterprise liquidity management,deepen the awareness of target cash holding;Third,perfect ownership structure,improve the level of internal governance;Fourth,expand financing channels and establish a good financing environment.