A Study On The Impact Of Cross-listing On The Dynamic Adjustment Of Financial Flexibility

In recent years,with the rapid development of our economics,the external environment has changed intricately.Faced with these unpredictable changes,enterprises should keep the reaction ability and the prevention capacity in finance to adapt the variations of dynamic environment.The capacity of reaction and prevention in finance are financial flexibility.Financial flexibility is a kind of vital financial decision that is related to the development of enterprises so that it can strengthen the enterprises' financing capacity.The suitable storage of financial flexibility can avoid the financial difficulties of enterprises.On the contrary,the insufficient storage of financial flexibility will lead to the high cost of external financing because of the asymmetric information.However,the excessive financial flexibility easily causes the agent problems between managers and shareholders.Therefore,how to keep a reasonable financial flexibility is a theoretic and practical problem.Although there have been lots of researches of domestic and foreign scholars aiming at the influence factors of financial flexibility,most of these literature focused on the static aspect rather than researching whether enterprises exist financial flexibility or not and the adjustment problems of financial flexibility from the perspective of dynamic aspect.However,financial flexibility,as a financial decision of enterprises,constantly changes.Thus,it's necessary to boost the research level of financial flexibility to dynamic level.This dissertation,based on the dynamic measurement theory,construct the dynamic research framework of financial flexibility.Meanwhile,based on that,this dissertation also analyzes the cross-listing's influence on financial flexibility during the period of dynamic adjustment of financial flexibility mainly including the adjustment speed of financial flexibility,deviation degree and adjustment method.Cross-listing,as an important phenomenon of capitalist market,it influences the decisions of enterprises so that it affects financial flexibility.Firstly,it is possessed of governing effect which can constrain the controlling shareholders to seize right,relieve the agency problems and decrease agency cost to influence financial flexibility.Secondly,cross-listing owns financing effect which can provide varies levels of financing chooses of enterprises,relieve financing constraint and decrease financing cost so as to influence financial flexibility.According to existing literature,the researches of relevant problems of financial flexibility are based on static perspective and few scholars study the self-adjustment problem of financial flexibility at dynamic perspective.Hence,this dissertation firstly establishes a dynamic adjustment framework of financial flexibility under dynamic measurement theory and then verifies the existing of financial flexibility.The research explains the adjustment process and the cross-listing's influences on financial flexibility dynamic adjustment from the dynamic perspective based on the financial flexibility's dynamic adjustment.How to determine research samples and target financial flexibility scientifically and effectively is the point and difficulty of cross-listing's influence to financial flexibility dynamic adjustment.Aiming at the determination of cross-listing's samples,this dissertation selects the PSM proposed by Rosenbaum and Rubin(1983)to control the endogenous problems of primary system when our enterprises list overseas and uses the one-to-one ratio to determine the company samples that aren's cross-listing.Targeting at the measuring of financial flexibility,the difficulty lies in how to determine the composition of financial flexibility.This dissertation takes reference from the research of Zeng Aimin(2011)and divides financial flexibility into cash flexibility and liability flexibility.This dissertation firstly takes reference of Byoun's(2008)research to find the company characteristic variables that influence target financial flexibility and tries to set up the dynamic adjustment model of cross-listing's influences on financial flexibility.The whole dissertation is divided into eight chapters:Chapter ?:Introduction.This chapter mainly introduced the research background and significance,the defining of relevant concepts,the research aims and contents,the research thinking and methods together with the research contribution and innovations.Chapter ?:Literature Review.This dissertation carries out the review in three main themes:The first one is about the review and arrangement of financial flexibility including the means of financial flexibility reserve and dynamic adjustments.The second one is the review of cross-listing research and arrangement mainly including cross-listing's governing effect and financing effect.Thirdly,it is about the review and arrangement of the research in the relations between cross-listing and financial flexibility dynamic adjustment which mainly includes the impact of governance effect and financing effect of cross-listing on financial flexibility dynamic adjustment.Through the literature review,the author can clearly grasp the research's current situation and development direction of this field.After grasping the predecessor's researches and arranging them,the author will acquire the empirical research methods,relevant variable measurements and other contents so as to clarify this dissertation's contents and possible innovations.Chapter ?:Theoretical Foundation:Referring to the research results of financial management,management,contract economics and information economics,this dissertation regards the dynamic measurement theory as a foundation theory,and takes reference of cross-listing theory,principal-agent theory and financial constraints theory to discuss the function mechanism of influence factors of cross-listing on financial flexibility so as to establish a theory foundation of the following empirical research.Chapter ?:Analysis of the Background of Chinese Listing Companies' Cross-listing.This chapter first introduces the institutional background and current situation of Chinese cross-listing companies.Then,this part analyzes local cross-listing which are divided into cross-listing of A-shares and H-shares and the cross-listing of A-shares,H-shares and N-shares.Eventually,it analyzes cross-listing models which are divided into first H-shares and then A-shares,the synchronization of A-shares and H-shares and first A-shares and then H-shares these three conditions,and analyzes the dynamic reasons of first H-shares and then A-shares and first A-shares and then H-shares these two cross-listing models.It concludes that the cross-listing model of first H-shares and then A-shares owns historical reasons and government leading elements.The cross-listing model of first A-shares and then H-shares is the ideal cross-listing model.That establishes a realist background foundation for the subsequent empirical research.Chapter ?:Cross-listing and the Adjustment Speed of Financial Flexibility.This dissertation researches the influence of cross-listing on the adjustment speed of financial flexibility.Firstly,in order to control the endogenous problem brought by the primary system of overseas listing of Chinese enterprises,this dissertation uses PSM to find out the matching samples of cross-listing companies.Secondly,it draws lessons from the research of Edmonton(2011)to measure financial flexibility.Thirdly,it uses the mean regression model of Opler(1999)to verify the existence of target financial flexibility.Finally,it draws lessons from the research of Byoun(2008)to determine the company's characteristic factors that influence the target financial flexibility and researches the relations between cross-listing and financing flexibility's dynamic adjustments on the whole;it tests the influences of cross-listing's locations and models on financing flexibility's dynamic adjustments;it divides samples into two groups according to whether they are lower or higher than target financing flexibility's level,so as to respectively research the cross-listing and financing flexibility's adjusting speeds in these two situations.The research found that cross-listing has a significant positive impact on the overall adjustment speed of financial flexibility;the adjustment speed of A+H+N three cross-listing company's financial flexibility is higher than that of A+H two cross-listing company;the adjustment speed of company financial flexibility of "earlier external and later internal" is higher than that of "earlier internal and later external";after distinguishing the adjustment direction,the adjustment speed of downward deviation is higher than that of upward deviation.Chapter ?:Cross-listing and Financial Flexibility's Deviation Degree.On the basis of target financial flexibility in the fifth chapter,this chapter researches the relationship between cross-listing and the deviation degree of financial flexibility.First of all,it tests the deviation degree of financial flexibility of cross-listing companies on the whole.Then,it tests the influence of cross-listing location and model on the deviation degree of financial flexibility.Finally,it divides samples into two groups according to whether they are lower or higher than target financing flexibility's level,so as to respectively research the cross-listing and financing flexibility's adjusting speeds in these two situations.The research found that cross-listing has a significant positive impact on the overall adjustment speed of financial flexibility;the adjustment speed of A+H+N three cross-listing company's financial flexibility is higher than that of A+H two cross-listing company;the adjustment speed of company financial flexibility of "earlier external and later internal" is higher than that of "earlier internal and later external";after distinguishing the adjustment direction,the adjustment speed of downward deviation is higher than that of upward deviation.Chapter ?:Cross-listing and Financial Flexibility's Adjustment Method.Based on adjustment speed and deviation degree,this chapter researches cross-listing and financial flexibility's adjustment method from the two aspects of cash adjustment method and liability adjustment method,sets up logit model and tests cross-listing's role path on financial flexibility's dynamic adjustment.In order to further verify which adjustment method plays the main role,this dissertation makes a regression analysis on the speeds of cash and debt flexibility in the part of the robustness test and tests the impact of cross-listing on them.The research found that in the process of adjusting the financial flexibility to the target value of the company,cash and liability adjustment methods are effective,and cross-listing significantly increases the possibility of an enterprise to adjust its financial flexibility by increasing or decreasing cash,increasing or decreasing its liabilities.Among them,cash is the main adjustment method,which shows that the main path of cross-listing's influence on financial flexibility is cash adjustment method.Chapter ?:Research Conclusions,Policy Suggestions and Outlook on the Future.This dissertation mainly concludes the whole dissertation's research conclusions and provides policy suggestions for listing companies to reasonably adjust financial flexibility.Meanwhile,it also points out this research's innovations,deficiencies and the direction of future researches.This dissertation's research contributions and possible innovations are mainly divided into three aspects:(1)Enrich the research content in the field of financial flexibilityCurrently,the academic research on financial flexibility is mainly focused on the influence factors and economic consequences of financial flexibility.This dissertation researches the financial flexibility holding policy of enterprises from the perspective of cross-listing,further expands the governance effect and financing function of cross-listing to the impact on corporate financial flexibility,improves the theoretical framework of the impact of cross-listing on financial flexibility's dynamic adjustment,elaborates the mechanism between them,clarifies the relationship between them and enriches the research on the cross-listing field's theories and experience.(2)Broaden the research perspective of financial flexibilityAt present,the academic circle commonly researches the related issues of financial flexibility from the static perspective,mainly focuses on the influencing factors,measurement method and economic consequences of financial flexibility,while there is little research on the self-adjustment issue of financial flexibility from a dynamic perspective.And financial flexibility includes cash flexibility and liability flexibility.A large number of domestic and foreign scholars have confirmed the existence of the dynamic adjustments of cash holdings and capital structure,and cash holdings,capital structure and financial flexibility all belong to the financial decisions of the enterprise,so financial flexibility should be a dynamic process of adjustment.This dissertation takes dynamic trade-off theory as the theoretical basis throughout the full text,uses the dynamic perspective to research financial flexibility's dynamic adjustment,verifies the existence of target financial flexibility,researches financial flexibility's dynamic adjustment that is based on target financial flexibility,and explains the adjustment process of financial flexibility and the influence of cross-listing on the dynamic adjustment of financial flexibility from a dynamic perspective.(3)Deeply research the adjustment method of financial flexibilityAt present,the academic circle's researches on dynamic adjustments only remain in the analysis of adjustment speed and lack in-depth research on the adjustment method.After studying the influence of cross-listing on the adjustment speed and deviation degree of financial flexibility,this dissertation mainly deeply researches the influence of cross-listing on financial flexibility's adjustment method.It also judges which adjustment method is the main adjustment method of financial flexibility between the cash adjustment method and liability adjustment method,enriches the researches on the adjustment path of financial flexibility's dynamic adjustment and provides a useful reference for the enterprise to reasonably reserve financial flexibility.