Impacts of corporate diversification strategy on the quantity of cash holdings

In this paper the data of listed manufacturing companies are employed to systematically investigate the impacts of business diversification on corporate cash holdings through two points: the one is whether to be diversified and the other is the degree of corporate diversification. The research result indicates that corporate diversification has a positive impact on corporate cash holdings. The enterprises which are more likely to choose the diversification strategy have more cash holdings. And the degree of diversification has a significant positive effect on cash holdings. The enterprises with higher degree of diversification have more cash holdings. This study enriches the literatures about the discussion of the relationship between diversification and cash holdings. And this paper has practical significance on the corporate management.