Research On The Relationship Between Cash Flows And Investment Expenditure Of The Listed Companies Based On The Growth Perspective

Healthy growth of the enterprises is the source of power of the National economic development. But the capital market in China is still in its infancy, and there is a great risk. In order to reduce losses from this risk, we must have a clear understanding about the listed companies. So judging the company's growth is particularly important. The listed companies with strong growth may have more investment expenditure, but they are influenced with the capital structure and financing constraints, especially its internal internal cash flows, which is the most important problem that the company must consider at the time of investment chosen. Therefore, the relationship among the growth of listed companies, cash flows, and investment expenditure is very important. And the validation of this relationship has much more significance to understand the listed company's growth more clearly, provide more convenience to the development of growth companies, and solve the problems such as the insufficient funds, financing constraints and overinvestment or underinvestment.This article mainly divided into six major parts. The first part poses the issue, and explains the purposes and the meanings of this research, at the same time, sums up the relationships of the growth and cash flows, growth and investment expenditure, cash flows and investment expenditure. Then it defines the concepts of the growth, cash flows and investment expenditure. The second part is theoretical analysis. This article mainly analyses the MM theory, information asymmetry, pecking order theory, financing constraints theory, EVA theory, and enterprise growth of the firm, basis on the problems of the growth of the listed company, thus offers the theory foreshadowing for following research. The third part is the analysis of the listed company's growth. It mainly starts from the influencing factors of the growth, and then defines the variables of the growth, at the end, choses 3228 specimens of 1076 listed companies, from 2007 to 2009, and estimates the growth using principal components analysis. In this paper, we use Excel and SPSS 15.0 for data processing. Excel is primarily used for data collection, screening and sorting. SPSS is mainly used for descriptive statistics and regression model inspection. Then, the listed companies could be divided into two categories, which are high growth and low growth. The fourth section analyses the relationship between listed companies' cash flows and investment expenditure. At first, it analyses the influencing factors and measurement about the cash flows and investment expenditure respectively, and describes the status quo of the cash flows and investment expenditure. Then, we establish a model about the relationship between the listed companies'cash flows and investment expenditure. The empirical research result is that the listed companies'cash flows and investment expenditure is positive related. The fifth part analyses the relationship between the listed companies'cash flows and investment expenditure basis on the growth of the listed companies. On the basis of the empirical research about the relationship between the growth and cash flows, the growth and investment expenditure, it analyses the relationship between the listed companies'cash flows and investment expenditure, from high growth and low growth angle respectively. The sixth part is the summary of the conclusions and the outlook.This article mainly has four results. The first, this research constructs a listed companies' growth evaluation model. It chooses seven indexes with strong representative, they are Revenue Growth Rate, Net Capital Increasing Ratio, Earnings Per Share, P/E Ratio, Tobin Q, Net Income Increase Ratio and Sustainable Growth Rate. And it constructs a listed companies' growth evaluation model, using the science metering method.The second is the relationship between listed companies'growth and cash flows. Through the strict screening and balance processing of the panel data, we choose standardized net operating cash flows as the proxy variable of the internal operating cash flows, and then we have the correlation inspection and regression analysis of the sample companies'growth and cash flows. The result shows that the listed companies'growth and cash flow have positive correlation. The third is the relationship between listed companies'growth and investment expenditure. The inspection results of the empirical regression of the listed companies'growth and investment expenditure shows that the correlation coefficient of the listed companies'growth and investment expenditure is 0.02, and the p value is 0.01, which means that the listed companies' growth and cash flows have positive correlation. The forth is the relationship between cash flows and investment expenditure of different growth listed companies. (1) China's listed companies whether belong to high growth or low growth, its investment expenditure and internal cash flows have significant positive correlation. (2) The sensitive between the listed companies' investment expenditure and cash flows, which with lower growth, is higher than which with higher growth. It proves that the listed companies'investment actions are support the financing constraints hypothesis. That is underinvestment basis on the financing constraints could explain the sensitive relations between companies'investment and cash flows.