Empirical Study On The Investment-cash Flow Sensitivity Of Chinese Manufacturing Industy Listed Companies Under Financing Constraints

This paper focuses on the theme of Investment-Cash Flow Sensitivity of Chinese Manufacturing Industry Listed Companies Under Financing Constraints.On the basis of studying the theories and research findings about financial constraints and corporate investment home and abroad, this paper first analyses basic feature of Chinese capital market and listed corporations, then chooses the Manufacturing Industry Listed Companies of shanghai stock market from 2004 to 2008 as research object, empirical Studies the investment-cash flow sensitivity of Chinese Manufacturing Industry Listed Companies Under Financing Constraints. The paper empirical analyses investment-cash flow sensitivity and the inherent motivation of corporate investment behavior under the different financial constraints and trades.Theory study shows that the difference between internal and external financing cost makes companies under financial constraints. The empirical analysis shows that listed company's investment and cash flow have positive correlation, and the higher level of financing constraints, the stronger forms of sensitivity of investment-cash flow. When the financial constraints measured by Share Policy, Numbers of Times Interest Earned and Return On Equity, we found the higher level of financing constraints, the stronger forms of sensitivity of investment-cash flow. The inherent motivation test shows that the agency theory is the primary motivation causing the sensitivity of investment-cash flow. Different trades make different sensitivity of investment-cash flow. By comparison, sensitivity of investment-cash flow present positive correlation for the most listed companies of industries as petrochemical industry, textile industry and electronics industry while pharmaceuticals industry present negative correlation.Based on the theory and empirical analysis and developing situation of economics and capital market of China, the paper put forward some policy advisements about remitting external financial constraints , optimizing financing decision and raising efficiency of investment. The policy advisements involve improving Asymmetry of information of capital market, perfecting corporate governance system and developing corporate debt markets of our country.