Research On The Listed Company’s Financial Flexibility And Its Economic Consequences

In recent years, with the increase of uncertainty degree on enterprise management environment, some certain flexibility is necessary for the enterprise management system, and this kind of flexibility reflected in the financial management is financial flexibility. Financial flexibility refers to the ability which to buffer shock from adverse environmental change on enterprise investment and financing through financial arrangement in advance, and which to use opportunity arising from environmental change to improve the enterprise value in time. Financial flexibility reflect adaptability that the enterprise financial system possess in the face of the external environment changes,and its economic consequences mainly were reflected in help to improve the financing situation and improve the efficiency of investment and ultimately to increase enterprise value.But in the enterprise management practice, the economic consequences of financial flexibility related to financing constraint conditions of enterprise. But from the point of view of existing research results, it was lack of empirical evidence in this regard. For this reason, this paper, using the samples from 2006 to 2013 on A-share listed companies of China, focuses on relationship between financial flexibility and investment-cash flow sensitivity, financial flexibility and investment efficiency, financial flexibility and the enterprise values, under which differences on financing constraints caused by monetary policy and Controller PropertiesIn this paper, by adopting the combination of theoretical with empirical methods and based the literature review of the research history put forward theoretical basis and logical starting point. Based on this, the paper proposed relevant theoretical assumptions and used the panel model, the stochastic frontier model, the simultaneous equation model and path model empirically test and obtained empirical evidence of the listed company’s financial flexibility and the economic consequences. The main research conclusions are as follows:(1) Based on the quantification of the financial flexibility by the five-factor model and combied financial flexibility indicators into classic model of investment-cash flow sensitivity, the empirical study findings:Financial flexibility can effectively reduce of enterprise investment-cash flow sensitivity in the monetary tightening phase, and ease the financing constraints. But in the monetary loosing phase, the effect on financial flexibility was not statistically significant; and after further distinguish the ultimate controller property found that financial flexibility can significantly reduce the investment-cash flow sensitivity of the non-state-owned companies, and effectively ease the financing constraints. However, financial flexibility is increased investment-cash flow sensitivity of the state-owned enterprises.(2) By established the panel fixed effect model on agency problems and financial flexibility impact on investment efficiency, the empirical study findings: Financial flexibility impact on investment efficiency is mainly reflected in relieve the under-investment of enterprise by reducing financing constraints.However, the impact of financial flexibility on over-investment showed no statistical significance. Further studies have found that by reducing the agent problems and so on to improve the company’s internal governance measures can effectively increase the effect of the financial flexibility to alleviate under-investment. And the marginal effect of financial flexibility to relieve the under-investment of enterprise statistically significant in the non-state-controlled enterprises, there is no statistically significant at the state-owned holding enterprises.(3) On the basis of the establishment of the simultaneous equations model, the empirical study findings:Financial flexibility impact on the enterprise value related to the degree of the enterprise financing constraints. When the enterprise financing constraints is bigger, moderately improving financial flexibility will help to increase enterprise value; under the condition of excessive competition in the industry, financial flexibility will strengthen the negative impact of the competition on the enterprise value. Conversely, when the enterprise financing constraints is lesser, excessive financial flexibility will reduce the enterprise value; and, to some extent, financial flexibility can offset the positive influence of the competition in the industry on enterprise value. Further by establishing a path model finds that different enterprises on the financing constraints, the choice for policy of financial flexibility preferences differ. Namely, the choice of value realization is different.In short, financial flexibility is one of the most important financial decisions on enterprise. The paper carried on the comprehensive and systematic analysis on the measurement of China’s listed company’s financial flexibility; financial flexibility and investment-cash flow sensitivity; financial flexibility and enterprise investment efficiency; financial flexibility and the enterprise value.The conclusions will be expect to make some margin contribution in the above-mentioned aspects, and enrich the existing research results concerning the financial flexibility.At the same time, the research conclusion can be used as a government policy setting, including monetary policy and macroeconomic policy, and provide theoretical basis to reduce enterprise external financing constraints; provide the reference basis for enterprise management to dynamically make decision based on the external policy changes and characteristics, and improve the rationality and validity of the financial policy making...