Firm's Growth and Corporate Cash Holdings

This paper investigates the empirical determinants of corporate cash holdings in the perspective of growth according to the classification of the growth in listed companies of China. We focus on the influence factors including the financial characteristics and corporate governance and find that cash flow, cash substitutes have a significant positive relation with the level of cash reserves, and the debt maturity structure exerts a significant negative impact on cash holdings for all sample companies. For the high-growth listed companies, the result reveals that capital expenditure, foreign ultimate controller, the separation of CEO and chairman have a significant influence on cash holdings, the volatility of cash flow has a weak impact. For the low-growth listed companies, we find that the return on asset has a positive influence on cash holdings in the 5% confidence level. On the whole, more evidence supports the information asymmetry theory, not the tradeoff theory.