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Impact of finance companies on the related publicly-listed companies' cash management

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This thesis examines the impact of finance companies of enterprise groups on the related publicly-listed companies’ cash management, focusing on the sensitivity of investment-cash flow, the sensitivity of cash–cash flow, and cash holdings of corporates, by using samples from Chinese A-share stock market covering the period of 2000-2012. With China’s rapid economic development, finance companies as the financial institutions within business groups, have played an important role in enterprise groups and both internal and external capital market. However, due to congenital deficiency, the financial innovation is inhibited, which affect the financial functions of finance companies. In my thesis, related publicly-listed companies are those companies listed on A-share stock market in China which belongs to business groups have finance companies or of which finance companies have ownership. As introduced above, I hypothesis that agency problems and information asymmetry may exist and have impact on cash management of related publicly-listed companies. I made empirical regression and results show positive relationship between finance companies of enterprise groups and related publicly-listed companies’ corporate cash holdings, investment-cash flow sensitivity, and cash–cash flow sensitivity, which support my hypothesis. This thesis contributes to the finance company and cash management in China both theoretical and empirically.

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Yang, Zheng


Faculty of Business Administration


Department of Finance and Business Economics


M. Sc.


Corporations -- Finance

Cash management

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