Test For Hypothesis Of Free Cash Flow Of Listed Company In China

Treating the right offerings in China capital market as the research subjects,this dissertation empirically investigates the effects that agency cost of free cash flow has on stock price when right offerings announce and on the company performances thereafter. Evidences found in this study are consistent with the hypothesis of Free Cash Flow.This paper includes four chapters as below:Chapter 1:Introduction. This chapter reviews the theory of Free Cash Flow and the solution of it:debt and takeover. Some empirical researches related also have been discussed respectively according to their research subjects about dividend policy,capital structure or takeover.Chapter 2:Research Methodology. In accordance with the theory of free cash flow,this chapter brings about two hypotheses. To test these hypothesises,market model adjustment method is adopted to determine abnormal returns during the window of right offerings. In addition,student test and Chi-square test are both used to examine the relationship between stock price and free cash flow.Chapter 3:Empirical Results. This chapter summarizes the empirical findings and comes to a conclusion that the theory of free cash flow is consistent with the phenomena of right offerings in China capital market.Chapter 4:Conclusion. This chapter summarizes the preceding theory analysis and empirical study. Besides,some limits of this study are also mentioned.