Research On The Influence Of OFDI On Financing Constraints Of Chinese Enterprises

Since the reform and opening up 40 years ago,Chinese enterprises have made great progress.However,financing constraint is the most prominent problem that enterprises are facing many bottlenecks and constraints.Under the influence of lagging financial system reform,unreasonable financial structure,credit discrimination,imperfect capital market,small size of stock market,lagging development of bond market and other factors,Chinese enterprises,especially private enterprises,are unable to obtain necessary financing support,with a low proportion of direct financing and widespread financing difficulties.Scholars have studied financing constraints based on information asymmetry theory,principal-agent theory and optimal order financing theory,and obtained fruitful results.However,these scholars mainly focus on the causes of Outward Foreign Direct Investment(OFDI)and the relationship between external factors and Outward financial constraints,and fail to study the impact of OFDI on Outward financial constraints of enterprises.What impact will OFDI have on financing constraints of Chinese enterprises?Is this impact different from western countries and makes the degree of corporate financing constraints vary greatly?Research on this issue will help better understand the economic consequences of China's OFDI.In imperfect capital market,the information asymmetry between outside investors and enterprises and principal-agent problems that exogenous financing cost higher than that of endogenous financing costs,forcing firms to rely too much on internal financing,and endogenous financing is limited,firms have to give up some valuable investment opportunities,enterprises face the financing constraint problem.Although an enterprise is limited and restricted by its external environment,it can also cope with the risks and uncertainties that an enterprise may encounter in the process of resource acquisition through the implementation of relevant strategies.OFDI is an important way.OFDI's impact on Chinese enterprises financing constraints reflected in the increase of cash flow,in particular:on the one hand,OFDI using the "contact effect",through the gap with the host country outside investors geographic distance,the connection between the close economy,reduce the risk premium of outside investors,thereby lowering the external financing costs,optimize the quality of enterprise's external financing channels and financing,expand external financing cash flow of the enterprise complement ability,thereby alleviating financing constraints;On the other hand,OFDI makes use of its "export effect" and "technology spillover effect" to improve the generating capacity,speed and quality of internal cash flow of enterprises through the intermediary effect of export and technological innovation,so as to improve the internal financing capacity and alleviate financing constraints of enterprises.In the context of widespread financing constraints and large-scale "going global" of Chinese enterprises,what impact will OFDI have on financing constraints of Chinese enterprises?Can OFDI enterprises overcome the uncertainty in the process of outward investment,help enterprises increase cash flow and alleviate financing constraints?This forms the theme of this paper.Based on the above research background,this paper,In accordance with the "OFDI—?cash flow—?financing constraints" research train of thought,to China's Shanghai and shen zhen two city in 2004-2013 a-share main board listed companies and the ministry of commerce to provide the list of foreign investment enterprises(institutions)of the merger of the data,by using Propensity Score Matching(PSM)and Difference In Difference(DID)research method of combining the OFDI directly affect the enterprise financing constraints for China,And the mediating effect model is used to study the influence of OFDI's mediating effect on financing constraints of Chinese enterprises by utilizing export and technological innovation.This paper finds that OFDI's impact on financing constraints of Chinese enterprises is mainly reflected in its impact on corporate cash flow.On the one hand,OFDI makes use of its "contact effect" to expand the ability of external financing to supplement corporate cash flow.On the other hand,OFDI uses its "export effect" and "technology spillover effect" to increase the internal cash flow of enterprises through the intermediary effect of export and technological innovation.Specifically speaking:(1)OFDI using the "contact effect",through closer to the enterprise and the host country outside investors,institutional investors,analysts and auditors geographic distance,enhance the connection between them,reduce the information asymmetry,reduce the agency conflict,reduce the risk premium of outside investors,thereby lowering the external financing costs,optimize the quality of enterprise's external financing channels and financing,expand external financing cash flow to the enterprise supply ability,thereby alleviating financing constraints.However,this effect is due to the heterogeneity of ownership nature of OFDI enterprises,income level of host country and different investment motives.Compared with state-owned enterprises,OFDI of private enterprises has more obvious influence on the supplementary ability of external financing to corporate cash flow.From the perspective of income level of the host country,OFDI in developed countries has a more significant impact on the supplementary capacity of external financing for corporate cash flow.Compared with other investment motives,it is most effective to seek market-oriented OFDI to influence the supplementary capacity of external financing to corporate cash flow.From the perspective of impact mechanism,OFDI is the choice of the most productive enterprise,which urges the enterprise to reduce earnings management,improve accounting robustness,improve the quality of accounting information,and thus alleviate the financing constraints of the enterprise.(2)OFDI makes use of its "export effect" to increase the profitability of enterprises through the intermediary role of exports,so as to provide guarantee for stable cash flow and alleviate the constraint of endogenous financing.However,this intermediary effect is heterogeneous due to the ownership nature of the enterprise,the income level of the host country and the investment motivation of OFDI.Compared with state-owned enterprises,OFDI of private enterprises alleviates the financing constraint of enterprises more obviously through the intermediary effect of export.From the perspective of income level of host country,compared with developed countries,OFDI of developing countries has a more significant effect on alleviating financing constraints of Chinese enterprises through the intermediary effect of export.Compared with other investment motives,market-oriented OFDI is the most effective way to alleviate financing constraints of Chinese enterprises through the intermediary role of export.(3)OFDI makes use of its "technology spillover effect",and through the intermediary role of technological innovation,it is conducive to the difference between new products produced by enterprises and existing products in the market,reduces the demand elasticity of new products and strengthens its monopoly power,so as to set a relatively high price level.At the same time,it is conducive to reducing the marginal production cost of enterprises,so as to obtain higher profits,increase the level of internal cash flow of enterprises,and alleviate the constraints of internal financing.However,this intermediary effect is also heterogeneous due to the ownership nature of enterprises,the income level of host country and the investment motivation of OFDI.Compared with state-owned enterprises,private enterprises OFDI can alleviate the financing constraint of enterprises more obviously through the intermediary effect of technological innovation.From the perspective of income level of host country,it has a more significant effect on developed countries than on OFDI of developing countries in alleviating financing constraints of enterprises through the intermediary effect of technological innovation.Compared with other investment motives,seeking technology-based OFDI to alleviate financing constraints of enterprises through the intermediary role of technological innovation is the most effective.This paper provides a new research perspective for the study of the relationship between OFDI and financing constraints,and provides new empirical evidence for the study of the influence of OFDI on financing constraints.The main innovations can be summarized into three aspects:(1)This paper systematically analyzes the influence of OFDI on financing constraints of Chinese enterprises.Based on micro-data of enterprises,OFDI can reduce external financing costs,optimize external financing channels and quality of enterprises,and expand the complementary capacity of external financing to cash flow of enterprises by shortening the geographical distance with external investors in host countries.In addition,through the intermediary effect of export and technological innovation,OFDI can improve the generating capacity,speed and quality of internal cash flow of enterprises,so as to alleviate the financing constraints of enterprises.It makes up for the deficiency of simply analyzing the financing constraint from a single perspective in the past,which is conducive to better understanding the formation of financing constraint and expanding the understanding of OFDI theory of developing countries on financing constraint in the context of China.At the same time,according to the research idea of "OFDI—?cash flow—?financing constraint",this paper for the first time integrates OFDI and corporate cash flow and financing constraint into a framework for research,so as to analyze the relationship between OFDI and financing constraint in a more systematic and comprehensive way.(2)In order to overcome endogeneity,Propensity Score Matching and Difference In Difference were used to examine the influence of OFDI on financing constraints of Chinese enterprises by using enterprise panel data.The parameter estimation of panel data not only reflects the change of trend in time,but also overcomes the individual characteristic difference of different cross-section samples.In this paper,the mediating effect test is used to empirically analyze the impact of OFDI on the financing constraint of Chinese enterprises through the mediating effect of export and technological innovation.In order to ensure the reliability of empirical results,we tested the robustness from the aspects of sample matching,proxy variable selection,measurement method substitution and so on.(3)This article integrated the marginal industry expansion theory,technical accumulation theory,information asymmetry theory,principal-agent theory and new geographical economics theory,analyzes the OFDI influence on China's enterprise financing constraints,expand the marginal industry expansion theory,technical accumulation theory,information asymmetry theory,principal-agent theory and new geographical economics theory in China situation understanding of financing constraints;At the same time,based on the information asymmetry theory,principal-agent theory and new geographical economics theory,this paper analyzes how OFDI can optimize the external financing channels and quality of enterprises,expand the complementary ability of external financing to cash flow of enterprises,and alleviate financing constraints.This breaks through the understanding of the role of OFDI only based on a certain theory,and is conducive to a more comprehensive understanding of the role of OFDI in enterprise resource acquisition.