A Study Of No Beneficial Ownership And The Level Of Corporate Cash Holdings

In China’s listed companies,the proportion of shares held by major shareholders is large,and the existence of controlling shareholders or effective controllers in listed companies is also quite common.Therefore,the supervision of major shareholders is one of the important means to improve the corporate governance structure and strengthen the internal supervision of the company.Existing research shows that the involvement of major shareholders in company management can enhance management motivation,reduce agency costs and help improve company performance.Therefore,major shareholders become an important external supervisory force of the company,and their shareholding ratio will directly affect the effectiveness of corporate governance structure and the company’s business performance.However,in recent years,the number of enterprises without controlling shareholders and effective controllers has been gradually increasing in China,and the fragmentation of shareholdings in some listed companies has caused competition for control between shareholders and management,and even confrontation,which has brought negative impact on corporate governance and effective implementation of internal control.Therefore,it is important to study the specific impact of the absence of effective controllers on the level of cash holdings of companies.Cash is the most liquid of the company’s assets and,therefore,is more vulnerable to shareholder and management abuse than other company assets.In such cases,the majority shareholder or management may use the resources they themselves possess to engage in acts of misappropriation for their purposes of hollowing out.Therefore,does the absence of the effective controller have a positive or negative impact on the level of corporate cash holdings?Based on this background,this paper uses A-share listed companies in Shenzhen and Shanghai from 2009 to 2021 as the research sample to examine the impact of the absence of effective controllers on the level of cash holdings of listed companies based on the perspective of no effective controllers.It is found that the cash holding level of listed companies without effective controller is higher than that of listed companies with effective controller;the influence mechanism is found that listed companies without effective controller exacerbate the agency problem and thus increase the cash holding level,and listed companies without effective controller exacerbate the financing constraint and thus increase the cash holding level;the heterogeneity test in further research finds that when the company has two offices in one,the property right nature In the further study,the heterogeneity test found that when the company has two offices and the ownership nature is non-state,no effective controller will increase the level of cash holdings;when the shareholding ratio of institutional investors is higher and the company is subject to stronger regulation,the effect of no effective controller on the level of cash holdings of the company is weakened.This paper not only expands the gap in the study of no effective controller,but also provides implications for Chinese enterprises to further improve their internal governance mechanism and make rational cash holding decisions.