Government Decentralization and Cash Holding Level of State-owned Enterprises

Abstract

As an important part of the reform process of state-owned enterprises in recent years, government decentralization has a profound impact on the business activities of state-owned enterprises. The cash holding level of state-owned enterprises is not only related to the liquidity of state-owned enterprises, but also affects the effective value of state-owned enterprises in the product market competition. Taking the A-share state-owned listed companies in Shanghai and Shenzhen stock exchanges from 2001 to 2019 as samples, the OLS model is used to empirically test the impact of the government's willingness to delegate power on the cash holding level of state-owned enterprises. The research finds that the government decentralization has a significant negative relationship with the cash holding level of state-owned enterprises. Secondly, with the help of the intermediary effect model, the study finds that the government decentralization is to relieve the financing constraints of enterprises, reduce the policy burden of state-owned enterprises, and then reduce the cash holdings of enterprises. The research conclusion not only expands the relevant literature research on the impact of government decentralization on the cash holding level of state-owned enterprises, but also provides some reference for state-owned enterprises on how to improve their governance structure and capital management system.