Business Groups, the Nature of Ownership, and Corporate Cash Holdings

Abstract

Abstract:

We investigate whether business groups in China influence corporate cash holdings of the member firms, and the difference of this influence between state-owned enterprises and non-state-owned enterprises. We find that group affiliated firms have a lower corporate cash holdings than the independent ones, which means business groups act as internal capital markets. We also find that the impact of business group on corporate cash holdings varies between state-owned enterprises and non-state-owned enterprises, we find a more significant correlation in non-state-owned enterprises.

Key words: business groups, the nature of ownership, corporate cash holdings

Cai Weixing, Hu Zhiying. Business Groups, the Nature of Ownership, and Corporate Cash Holdings[J]. , 2016, 28(7): 236-251.

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