Studies On The Financial Flexibility And Financing Constraints Relief

The investment policy, the financing policy and the dividend policy are regarded as the three major decisions, in which the dividend policy is considered to be the one part of the financing. For this reason, the investment and the financing have became the very important contents. The financing as the initial point of the business activities of enterprises and its completing performance directly restrict the following management and development of companies. When the companies make the investment decision, it is indefinitely impossible to raise all the capital requirements from debt. It is also impossible to raise all funds through the equity financing. Furthermore, the external capital market has many restrictions towards the various financing ways. Therefore, enterprise's financing behavior often affected by the external restrictions because of the existing of the market friction. The financing constrains refers to the constrains restricted by the funding which the company investment needs when there is difference cost between the company's external funds and internal funds.In recent years, one of the popular studies on the capital structure is based on the financial flexibility. It gives a new perspective for concerning the enterprise emergency that is likely to happen or unforeseen. And it also provides new perspective for managing the capital structure of the future investment opportunity. The previous studies on the financial flexibility focused on the analysis of the financial conservative. By adopting the latest foreign research results of the financial flexibility, this thesis tries to introduce the financial flexibility of the company including the debt level and the cash flow level. This thesis, applying the study of the financial flexibility to the financing constrains, dose some research for the enterprise which has the different flexibility and its various financing constrains degree.Based on the theoretical research, this article selects the dada from listed non-financial enterprise between 2007 and 2009 and carries on the empirical research by using Stata 10 analysis software. The variable statistical and regression analysis of this thesis show the following findings:Firstly, the financial flexibility is constituted by conservative financial policies and holding lots of cash flow, so the financial flexibility has negative correlation to debt levels but positive to cash holding. Secondly, the financial flexibility companys have the ability for grasping the investment expansion opportunity because of its endogenous adequate fund and the better chance of getting the outside capital when it is confronted with the investment opportunities and the uncertain future profit drops. Therefore, the sensitivity of the investment for cash flow in company which has the strong financial flexibility will be lower than the non-flexibility company. That is, the degree of the financing constraints of the flexibility company will be lower than the non-flexibility company.