How does Strategic Deviance Affect Corporate Cash Holdings

Abstract

Abstract: Using data of A-share listed firms in China from 2007 to 2015 as samples,combined with the firms' competition position,this paper examines the impact of firms' strategic deviance on firms' cash holdings. The research shows that:strategic deviance is positively related to firms' cash holdings level. Firms' competitive position can weaken the positively relationship. The further test shows that:the higher strategic deviance can enhance firms' financing constraints,increase firms' risk and innovation investment,thus promote firms' cash holdings level. Strategic deviance can enhance corporate cash holdings' competitive effect,but such effect will be not significantly in higher competitive position firms. This study shows that the degree of strategic deviance is one of the important influence factors of corporate cash holdings,and the research can provide reference for firms' management to make cash holding strategy and choice corporate strategy to gain competitive advantage.

Key words: strategic deviance, cash holdings, competitiveposition, competitive effect

CLC Number:

F276.6

YANG Xing-quan, ZHANG Zhao-hui. How does Strategic Deviance Affect Corporate Cash Holdings[J]. , 2018(03): 41-53.

References

[1] Opler,T.,Pinkowitz,L.,Stulz,R.and Williamson,R.The Determinants and Implications of Cash Holdings[J].Journal of Financial Economics,1999,52(1):3-46.

[2] Almeida H.,Campello M.,and Weisbach M.S.The Cash Flow Sensitivity of Cash[J].Journal of Finance,2004,59(4):1777-1804.

[3] Ang,J.and Smedema,A.Financial Flexibility:Do Firms Prepare for Recession?[J].Journal of Corporate Finance,2011,17(3):774-787.

[4] Pinkowitz,L.,Stulz,R.,and Williamson,R.Does the Contribution of Corporate Cash Holdings and Dividends to Firm Value Depend on Governance? A Cross-country Analysis[J].The Journal of Finance,2006,61(6):2725-2751.

[5] Haushalter,D.,Klasa,S.,and Maxwell,W.F.The Influence of Product Market Dynamics on a Firm's Cash Holdings and Hedging Behavior[J].Journal of Financial Economics,2007,84(3):797-825.

[6] Acharya,V.V.,Almeida,H.,and Campello,M.Is Cash Negative Debt? A Hedging Perspective on Corporate Financial Policies[J].Journal of Financial Intermediation,2007,16(4):515-554.

[7] Frésard,L.Financial Strength and Product Market Behavior:The Real Effects of Corporate Cash Holdings[J].The Journal of Finance,2010,65(3):1097-1122.

[8] Keynes,J.M.The General Theory of Employment,Interest and Money[J].Macmillan,London.,1936.

[9] DiMaggio,P.J.Powell,W.W.The Iron Cage Revisited Institutional Isomorphism and Collective Rationality in Organizational Fields[J].American Sociological Review,1983,48(2):147-160.

[10] Baum,J.A.C.and Oliver,C.Institutional Linkages and Organizational Mortality[J].Administrative Science Quarterly,1991,36(36):187-218.

[11] 郑兵云,陈圻,李邃.差异化战略对企业绩效的影响研究——基于创新的中介视角[J].科学学研究,2011,29(09):1406-1414.

[12] Suchman,M.C.Managing Legitimacy:Strategic and Institutional Approaches[J].Academy of Management Review,1995,20:571-610.

[13] Brown,J.R.,and B.C.Petersen.Cash Holdings and R&D Smoothing[J].Journal of Corporate Finance,2011,17(3):694-709.

[14] 吴淑娥,仲伟周,卫剑波,黄振雷.融资来源、现金持有与研发平滑[J].经济学(季刊),2016,15(02):745-766.

[15] Geletkanycz,M.A.& Hambrick,D.C.The External Ties of Top Executives:Implications for Strategic Choice and Performance[J].Administrative Science Quarterly,1997,42(4):654-681.

[16] Meyer,J.W.and Rowan,B.Institutionalized Organizations:Formal Structure as Myth and Ceremony[J].American Journal of Sociology,1977,83(2):340-363.

[17] Tang J,Crossan M,Rowe W.G.Dominant CEO,Deviant Strategy,and Extreme Performance:The Moderating Role of a Powerful Board[J].Journal of Management Studies,2011,48(7):1479-1503.

[18] Hiller N,Hambrick D.Conceptualizing Executive Hubris:The Role of (Hyper-) Core Self-evaluations in Strategic Decision-making[J].Strategic Management Journal,2005,26(4):297-319.

[19] Carpenter,M.A.The Price of Change:The Role of CEO Compensation in Strategic Variation and Deviation from Industry Strategy Norms[J].Journal of Management,2000,26(6):1179-1198.

[20] Schroth,E.,and D.Szalay.Cash Breeds Success:The Role of Financing Constraints in Patent Races[J].Review of Finance,2010,14(1):73-118.

[21] Gaspar,J.and M.Massa.Idiosyncratic Volatility and Product Market Competition[J].Journal of Business,2006,79(6):3125-3152.

[22] 叶康涛,张姗姗,张艺馨.企业战略差异与会计信息的价值相关性[J].会计研究,2014,(5):44-51.

[23] Peress,J.Product Market Competition,Insider Trading,and Stock Market Efficiency[J].The Journal of Finance,2010,65(1):1-43.

[24] 陈志斌,王诗雨.产品市场竞争对企业现金流风险影响、竞争程度和企业竞争地位的双重考量[J].中国工业经济,2015,(3):96-108.

[25] Sirmon,D.,Hitt,M.Contingencies within Dynamic Managerial Capabilities:Interdependent Effects of Resource Investment & Deployment on Firm Performance[J].Strategic Management Journal,2009,30(13):1375-1394.

[26] 温忠麟,张雷,侯杰泰.中介效应检验程序及其应用[J].心理学报,2004,(5):614-620.

[27] John,K.,Litov,L.,Yeung,B.Corporate Governance and Risk Taking[J].The Journal of Finance,2008,63(4):1679-1728.

[28] Hadlock,C.,and J.Pierce.New Evidence on Measuring Financial Constraints:Moving Beyond the KZ Index[J].Review of Financial Studies,2010,23(5):1909-1940.

[29] 鞠晓生,卢荻,虞义华.融资约束、营运资本管理与企业创新可持续性[J].经济研究,2013,(1):4-16.

[30] Balkin,D.B.,G.D.Markman,and L.R.Gomez-Mejia.Is CEO Pay in High-technology Firms Related to Innovation?[J].Academy of Management Journal,2000,43(6):1118-1129.

[31] Makri,M.,Lane,P.J.,& Gomez-Mejia,L.R.CEO Incentives,Innovation,and Performance in Technology-intensive Firms:A Reconciliation of Outcome and Behavior-based Incentive Schemes[J].Strategic Management Journal,2006,27(11):1057-1080.

[32] Campello,M.Debt Financing Does it Boost or Hurt Firm Performance in Product Markets?[J].Journal of Financial Economics,2006,82(1):135-172.