Excess Cash Holding and Corporate Governance: A Comparative Study of Taiwan and Mainland China Firms
Catherina Ku, Torng-Her Lee, Haimin Chen, Da-Quan Chang

Abstract
This study explores the relationship between excess cash holding and corporate governance of firms across theTaiwan Strait. Due to special state ownership in private business, we adopt different ways to compare the corporate governance of two different business environments. In general, management shareholdings, board members shareholdings, and state shareholdings have no significant relationship with cash ratio, but foreign investors’ shareholdings have a significant positive relationship with cash ratio. In Taiwan, the data indicates that the interactive term of the board member shareholding and excess cash have a positive impact on the growth of a company’s market value; on the other hand, in China, the data shows that the interactive term of state ownership and the excess cash have a negative influence on the growth of company’s market value. The implication of this finding is that board member shareholding is in a better position to monitor management than other capital ownership.

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