Product Market Competition and The Cash Flow Sensitivity of Cash
- 管理学院－已发表论文 
本文立足于产业组织理论,以2000—2013年我国A股上市公司为样本,分别以行业掠夺风险、自然边界和成本价格边际三种不同的度量产品市场竞争的代理指标,基于静态和比较静态的方法,从现金持有“存量“和“流量“两个方面的内容分别展开,分析产品市场竞争对公司现金持有量和储蓄倾向即现金一现金流敏感性的影响。结论一致表明,在其他条件不变的情况下,产品市场竞争提高了公司现金持有量;面临激烈竞争的公司表现出更大的现金一现金流敏感性,即公司使经营活动产生的现金流以现金或现金等价物的形式留存于公司内部,而且,在考虑到融资约束的影响后,样本公司在产品市场竞争和融资约束的双重作用下,表现出最大的现金一现金流敏感性。It is commonly accepted that corporate decisions are fundamentally affected by competition in product markets.In particular,financial economists have shown that the nature of product market competition may influence firms' financing policy such as cash holdings.Despite the substantial development of the literature on corporate cash holdings,little attention has been paid to the effects of product market competition on the policy of cash holdings.The purpose of this paper is to understand how product market competition affects corporate cash holdings.This paper uses the methodologies of static analysis and comparative static analysis to study the relationship between product market competition and the policy of cash holding.The content of this paper is therefore twofold.First,we try to understand how product market competition affects the stock of corporate cash holdings.Second,we try to understand how product market competition affects the flow of corporate cash holdings,that is,the effects of product market competition on the decision to retain earnings in the form of cash.The paper investigates product market competition on the effect of cash holdings and the change in cash holdings of Chinese-listed firms for the period 2000—2013.We use three different measurates of product market competition:Predation risk,Nature hedge and Price-cost margin.Predation risk is used to measure how firms' growth opportunities co-vary with those of their industry rivals,we calculate the correlation of firm stock returns with industry stock returns.The regression coefficient on the industry return is then used as the proxy for predation risk.Greater values of this measure indicate a greater predation risk and more interdependence of investment opportunities,therefore more fierce product competition.Nature hedge is calculated as the absolute value of the difference between a ? rm's ratio of net fixed assets per employee and the median ratio in its industry.To make this difference comparable across industries,the difference is then scaled by the industry range of the capital-to-labor ratio.Smaller values of this measure indicate a greater similarity of a ? rm's operations with industry counterparts and therefore fierce product competition.The price-cost margin is defined as operating income before depreciation over sales.The price-cost margin is used in most of the industrial organization(10) literature and refers to the ability of the firm to price above marginal cost.The lower value of price-cost margin indicate a more fierce product competition.Predation risk is positively correlate to cash holdings and the cash flow sensitivity of cash.Nature hedge is negatively correlate to cash holdings and the cash flow sensitivity of cash.The price-cost margin is negatively correlate to cash holdings and the cash flow sensitivity of cash.The conclusions show that:(1) Ceteris puribus,cash holdings increase with the strength of product market competition;(2)Product market competition should be related to a firm's propensity to save cash out of cash inflows,which referred to as the cash flow sensitivity of cash.The effect of product market competition on the cash flow sensitivity of cash is more pronounced in firms with greater financial constraint.The effect of product market competition on the cash flow sensitivity of cash increases with intensity of financial constraints and the strength of product market competition.The firms which face financial constraints and intense competition show the strongest the cash flow sensitivity of cash.This paper contributes to the literature extending the content of corporate cash policy,that is,analysis the effect of product market competition on the cash flow sensitivity of cash.The primary innovation of this paper is to analysis the cash holdings in comparative static methodology rather than analysis the cash holdings in static methodology,as previous papers have.Taken together,the findings lend support to and give economic meaning to a direct effect between product market competition and the corporate policy of cash holdings.