Environment Uncertainty,Managerial Overconfidence And The Dynamic Adjustment Of The Financial Flexibility

With the deepening of the degree of economic globalization,uncertainty has become one of the important characteristics of the business environment.How to use the "flexible"thinking to guide the production and operation of enterprises has become one of the topics of theoretical and practical circles.Reserving financial flexibility will help enterprises to deal with environmental uncertainty and grasp the favorable investment opportunities,Can reduce the cost of enterprises to obtain capital and adjust the capital structure and then realize the maximization of enterprise value.Therefore,the financial flexible reserve of the enterprise should be adjusted timely and effectively according to the change of the operating environment,Research on the dynamic adjustment of financial flexibility with the combination of environmental uncertainty has certain theoretical significance and practical value.In recent years,the domestic and foreign scholars have studied the influence factors of financial flexibility,the measurement of financial flexibility and the economic consequences of financial flexibility,achieved fruitful research results.But most of the researches on financial flexibility are based on the static perspective to analyze the impact of financial flexibility on the production and operation of enterprises.Few scholars study the adjustment of financial flexibility from the perspective of dynamic.Financial flexibility as a kind of means and methods to resist risks and seize investment opportunities,the role is not only reflected in its reserves,but also reflected in the financial flexibility of the initiative adjustment,only in the process of adjustment,financial flexibility is able to maximize its role.Due to the environmental uncertainty usually becomes the motivation of enterprise actively adjust the financial flexibility level of reserves,and the psychological characteristics of managerial factors will also directly affect the environment uncertainty on corporate financial flexibility dynamic adjustment mode and speed,therefore,based on the dynamic balance theory,combined with the theory of contingency theory and behavior finance the environmental uncertainty and managerial overconfidence into a dynamic research framework of flexible financial,comprehensive survey of corporate internal and external factors of financial flexibility of dynamic adjustment,to carry out a more systematic study on the dynamic adjustment of financial flexibility.The dissertation is consists of seven chapters.Chapter 1:Introduction.This chapter mainly introduces the research background,research significance,the definition of related concepts,research ideas and methods as well as the innovation points,points out the theoretical and practical significance of the study of financial flexibility.Chapter 2:Literature review.This chapter summarizes the relevant literature at home and abroad from four aspects of financial flexibility,environmental uncertainty,managerial overconfidence and adjustment of financial flexibility.Through the review of domestic and foreign scholar’s research results,on the one hand,can grasp the status quo of research context,the field clear,and study the problems;on the other hand,can also provide methods and tools on the model variables from the empirical study,to lay a solid foundation for the empirical study.Chapter 3:Theoretical basis.This chapter analysis and summarizing the trade-off theory,agency theory,contingency theory and financial Overconfidence Theory which laid a theoretical foundation for the research framework of dynamic adjustment of financial flexibility.Chapter 4:The empirical test of the dynamic adjustment of financial flexibility.This chapter from the "buffer effect" and "agency conflict" perspective,theoretically proves the existence of the flexibility of the business objectives of financial and financial flexibility,through the construction of the mean regression model,an empirical test of flexible financial reserve enterprises exist to target financial flexible adjustment trend.Chapter 5:The influence of environmental uncertainty on the dynamic adjustment of financial flexibility.This chapter presents the relationship between environmental uncertainty and dynamic adjustment of financial flexibility.On this basis,this dissertation constructs a dynamic adjustment model of financial flexibility,introduce the variable of environmental uncertainty,put environmental uncertainty into the research framework of flexible financial dynamic adjustment,from the macro environment,industry environment uncertainty and uncertainty of individual enterprise environmental uncertainty three subdivision level,empirical test of the effect of environment uncertainty on the speed of the adjustment of dynamic financial flexibility.Chapter 6:the influence of environmental uncertainty and managerial overconfidence on the dynamic adjustment of financial flexibility.This chapter based on the dynamic model of flexible financial management,introduce the overconfidence psychological variables,and put the characteristic of managerial factors into the research frame of the dynamic adjustment of the financial flexibility,an empirical test of environmental uncertainty and management of cross influence of overconfidence on the formation of the interaction of flexible financial dynamic adjustment.Chapter 7:Research conclusion and Policy suggestion.This chapter mainly summarizes the full text of the research conclusion,put forward the policy recommendations,at the same time pointed out the deficiencies of this study and the direction of future development.There are three main conclusions in this dissertation.(1)The enterprise has the objective financial flexibility,and the financial flexible reserve of the enterprise will be adjusted to the target direction.Financial flexibility has a "buffer effect",which can help enterprises to achieve the timely adjustment of capital structure and the reasonable allocation of financial resources,and enhance the value of enterprises when the environment uncertainty increased.But in the "agency conflict",selfish behavior of flexible financial reserves are too high to induce managers,managers opportunism and self-interest behavior will lead to financial flexibility abused,erosion of flexible financial reserves brings to the enterprise value promotion.Enterprise’s financial flexibility will be in the balance between the value of income and reserve costs,the existence of the target financial flexibility.In addition,when the financial flexibility reserve level of enterprise changes,deviates from its target level,Enterprises in the period after the operation will active adjustment of financial flexible reserve to return to the range of the target financial flexibility level.(2)Environmental uncertainty will speed up the dynamic adjustment of financial flexibilityThe uncertainty of environment is the precondition for the enterprise to carry on the financial flexible reserve,and it is also the main reason for the enterprise to carry on the financial flexible adjustment.Due to environmental changes cannot be accurate expectations,so the role of financial flexibility will be to maximize the play out.The enterprise’s financial flexible reserve will be actively adjusted according to the changes of the environment.When the external environment of capital market appear larger fluctuation,the existing enterprise financial flexibility level may gradually deviate from the goal of financial flexibility,the deviation will lead to flexible financial reserve enterprises may not be as effective to meet the internal needs of the financial resource of the enterprise,cannot provide sufficient guarantee for the smooth operation of enterprises.Therefore,when the environmental uncertainty intensified,the enterprise will re-examine their own financial management strategy,improve the speed of dynamic adjustment of the flexibility of financial,the range can timely return to the target level of financial flexibility.(3)Managerial overconfidence will reduce the sensitivity of environment uncertainty to the dynamic adjustment of financial flexibilityA kind of overconfidence as managers of their own existence,which will cause the overestimate their ability in the process of decision-making,underestimate the possible risks and difficulties,reduce the sensitivity of enterprises to prevent environmental uncertainty,weakening the effect of financial flexibility.Compared to the managers,overconfidence manager estimate and forecast for fluctuations in the external environment will lose objectivity and accuracy relative,lead management and enterprise development to hold blindly optimistic attitude and emotion reduce the uncertainty of environment sensitivity to adjust the speed of dynamic financial flexibility.There are three main contributions and possible innovations in this dissertation.(1)Broaden the research perspective of financial flexibilityScholars at home and abroad mainly focus on the research of financial flexibility from a static perspective,mainly focusing on the factors of financial flexibility,the measurement of financial flexibility and the economic consequences of financial flexibility.In the present literature,there are few studies on the adjustment of financial flexibility from the dynamic perspective.As a kind of ability to adapt to the environment change,the financial flexibility is not only reflected in the early prevention reserve,but also reflected in the timely adjustment of the changes in the environment.Only in the process of dynamic adjustment,financial flexibility can play the biggest role.Based on the literature review and summary,issues related to study financial flexible dynamic adjustment using the dynamic perspective,to provide new perspectives and ideas for the research of flexible financial,but also to provide data support for enterprise financial reserves and flexible adjustment.(2)Perfecting and supplementing the research framework of financial flexibility dynamic adjustmentThe existing research literature does not form a clear and unified research conclusion on the relationship between financial flexibility and enterprise’s objective financial flexibility.Although scholars at home and abroad based on the financial flexibility of the prevention and use of property,that the financial flexibility of the enterprise value has a significant role in promoting.However,the corporate cash holdings and the remaining debt capacity is the most important financial flexibility of the two sources,and these two factors will lead to the agency problem.Through in-depth analysis of the primitive attributes of financial flexibility,a comprehensive analysis of the financial flexibility of the impact to the enterprise from two aspects of buffer effect and agency conflicts,from the theoretical analysis of the existence of flexible and effective financial targets,the theoretical analysis is verified by the empirical method,improve and supplement the research framework of financial flexible dynamic adjustment.(3)The theory of behavioral finance is introduced into the research framework of the dynamic adjustment of financial flexibility.Scholars at home and abroad seldom study the dynamic adjustment of financial flexibility from the perspective of enterprise managers.The behavioral finance Overconfidence Theory into the research framework of dynamic financial flexibility,combined with external environmental factors,empirical analysis of the combined effects of environmental uncertainty and managerial overconfidence on financial flexibility dynamic adjustment.Not only broadens the research direction of financial flexibility,but also can help the enterprise from the perspective of managers,combined with external business environment changes,better control of the level of financial flexibility of enterprises.