Financial Cycle Changes and Corporate Capital Allocation Efficiency:Empirical Evidence Based on Cash Holding Perspective
The level of corporate cash holdings reflects its ability to allocate funds.Exploring the relationship between financial cycle changes and corporate cash holdings is of great significance to achieve high-quality financial development and high-quality corporate development.This article takes A-share listed companies from 2003 to 2022 as the research object,and systematically examines the impact of financial cycle changes on corporate cash holdings and its mechanism.Research results show that corporate cash holdings show counter-financial cycle changes,that is,during the upswing of the financial cycle,companies tend to reduce cash holdings and reduce the speed of cash adjustment.Mechanism test results show that changes in the financial cycle mainly affect corporate cash holdings through the dual channels of financing costs and investment substitution.Heterogeneity test results show that companies with smaller scale,higher growth potential and higher executive shareholding ratio have stronger countercyclical changes in cash holdings.Further research finds that companies are more likely to increase their holdings of monetary funds and cash from financing activities during the downturn of the financial cycle,which not only enhances their risk-taking capabilities but also reduces the value of their cash holdings.The article enriches and expands the research literature on financial cycles and corporate cash holdings.It not only helps academics and practical departments to have a deeper understanding of the microeconomic effects of financial cycle changes,but also provides certain theoretical reference and practical reference for promoting companies to proactively formulate and implement cash management strategies,and achieve high-quality development.
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