Optimization of the Relationship between Cash Holding and Corporate Performance through Digital Technology

Rapid advancements in cutting-edge digital technologies have furthered the digitalization of financial management models of enterprises. In the present work, the Eviews software is employed to unveil the complexity of cash holdings of listed Chinese manufacturing companies and examines its interaction with company performance and agency costs. The main research question of the thesis revolves around the strategies used by companies in developing economies to formulate cash holding policies and how these policies affect overall company performance. It is found empirically that the curve of relations between cash holdings and the performance of Chinese manufacturing companies shows an inverted U-shaped pattern: as the cash holdings increase, the manufacturing companies’ performance first increases before declines under the negative impacts from the agency cost. Recommendations for optimization are proposed accordingly: accounting personnel can use technologies such as AI algorithms, RPA (Robotic Process Automation), and blockchain to provide forward-looking analysis of cash flow and profit changes for management, significantly improving the automation level of financial processes, enhancing financial transparency, and reducing the adverse impact of excess cash holdings on corporate performance.