| Summary: | 碩士 === 國立彰化師範大學 === 商業教育學系 === 96 === This paper is to examine the determinants of corporate cash holdings by publicly traded Taiwan non-financial firms in the 1996-2006 period. We investigate the impacts of finance, corporate governance and cash flow on corporate cash holdings.
We find that the relation between leverage and cash holdings is non-linear in food industry, plastic industry and electronics industry, because the firms in these industries may raise debt to decrease agency problem of cash holdings at lower level of leverage. However, as leverage increase firms accumulate larger cash to pay the interest expenses and principal. Therefore the non-linear relation is a “U” shape. By the way, we also find that the relation between leverage and cash holdings is negative in other industries.
Additionally, our results show that the supervisal effect of the institutional investors and foreign investors will decrease cash holdings, and the firms increase ones to avoid raising financial risk when corporate cash flow variability are larger.
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