The Research On The Board Of Directors Supervision And Equity Incentive Effects On Corporate Cash Flow Risk

With the post-financial crisis,the financial management concept of "cash is king"once awakened again,especially in the current our country enterprise is to complete the historical mission that strategic transformation and upgrading.How to balance the cash flow risk in this process has attract the focus of the current social circles.The state-owned assets supervision and administration took the lead in 2015 issued The notice about further do a good job related matters of central enterprises increased their savings and expenditures to intensify the implementation of the state enterprise to increase cash holdings.However the relevant policy documents guiding role is important to prevent corporate cash flow risk,but should be more to using the strategies such as supervision and incentive mechanism of corporate governance to achieve the possiblity of defusing cash flow risk at the beginning.As the Organization for Economic Cooperation abd Development(OECD,2009)says:" The biggest warning of the financial crisis is that boards have been unaware of the importance of monitoring corporate risk".In summary this article selects the perspective of board supervision and equity incentive to study them how to effect the enterprise cash flow risk.One hand,it is possible to provide the means and path of the special system environment in order to prevent the cash flow risk by the implementation of the policy.On the other hand,it can promote represented by the board of directors supervision and equity incentive mechanism of corporate governance to better serve corporate cash flow risk prevention and achieve the enterprise operation soothly,eventually helping to achieve the goal of strategic transformation and upgrading of enterprises.This article firstly to analyzed the basic theory and research results of board supervision,equity incentive and enterprise cash flow risk,in order to clarify the entry point and the key exploration direction of this article.Secondly,combining the "SCP analysis paradigm" to systematic analysis the coupling paths and behavior factors of the board directors and equity incentive effect enterprise cash flow risk,thus to build the analysis framework.Thirdly,based on the research content required to analysis the mechanism of cash flow risk generation and evolution,then use the Kalman filtering method to construct cash flow risk prediction and the discriminant model for achieve the dynamic measurement of cash flow risk.Finally,this article divided the content into three chapters to proceed system in-depth theoretical analysis and empirical test of board supervision,equity incentives and the interaction between them to effect the cash flow risk.Then get the following conclusions:Through the research on the impact of board supervision on the cash flow risk,could find the board supervision has a significant negative correlation with cash flow risk.And also the structure and independence of board supervision have shows a significant negative correlation with cash flow risk.In particular,the CEO duality have no conductive to controll the cash flow risk,but to set the committe of board perfectly could offset the above adverse effects.The more independent directors and more financial expert of them,the lower cash flow risk.In contrast,the more number of part-time corporates of independent director and more rate of big shareholders non-executive directors leave gaps have a significant positive effect on the cash flow risk.Finally combined with the nature of property rights,could found that the board of directors supervision effect cash flow risk in private enterprises shows more significant than that of state-owned enterprises,it's just because the the agency costs of private enterprises shows complete mediation effect,however the agency costs of state-owned enterprises shows partial mediation effect.Through the research on the impact of equity incentive on the cash flow risk,could find that equity incentive through agency costs to influence cash flow risk and shows a "U" type change,it's give empiricial evidence of the "Trench Effcet Hypothesis".The change inflection point value of equity incentive effect cash flow risk in state-owned and private enterprises is 0.3579 and 0.1936.Which presents if the state-owned(private)enterprises expected stimulate subject and original holding shares accumulated less than 35.79%(19.36%),the lower they holding the more cash flow risk.Finally combined with the nature of property rights,could found that the equity incentive effect cash flow risk in private enterprises shows more significant than that of state-owned enterprises,it's just because the the agency costs of private enterprises shows complete mediation effect,however the agency costs of state-owned enterprises shows partial mediation effect.Through the research on the interaction impact of board directors supervision and equity incentive on the cash flow risk,could find that if the board of directors supervision and equity incentive effect cash flow risk at the same time will cause a certain degree of suppression effect.Combined with the nature of property rights and equity incentive inflection point could find that if equity incentive value of state-owned(private)enterprises lower than 0.3579(0.1936),the complementary effect would cause lower cash flow risk.In contrast,if the equity incentive value of state-owned(private)enterprises higher than 0.3579(0.1936),the substitution effect would cause more(lower)cash flow risk.Finally combined with the stage of cash flow risk,could find that there have substitution effect of board supervision and equity incentive acting on cash flow risk when the cash flow risk in health period(forming period),then shows the promoting(restraining)effectiveness of cash flow risk.However,there have complementary effect of board supervision and equity incentive acting on cash flow risk when the cash flow risk in outbreak period,then shows the restraining effectiveness of cash flow risk.It indicates that first of all,the construction of corporate governance mechanism is no longer "once for all" and "universal applicable",not only to strengthen and clear the board of directors within the enterprise's authority and supervision responsibilities,do best to avoid CEO duality and improve the construction of committe within board and its independent protection,but also concerned about the implementation of equity incentive of the "Trench Effect" to optimize the design stage of equity incentive.Secondly,enterprises should based on the use status quo of board of directors supervision and equity incentive to take reasonable measures to curb the cash flow risk.Again,based on the characteristics of China's special system background,not only to constantly improve the professional managers of the market,but also in the development of relevant industrial policies should continue to expand the scope of private capital.Finally,enterprises should establish their own cash flow risk early warning system,through scientific and reasonable quantification and control measures to match,ultimately to achieve the effective prevention of corporate cash flow risk.