An Empirical Study On The Linkage Between Listed Companies Cash Flow And Financing Decisions

Cash flow is a kind of information which can describe financial situation of the corporate;it also has a strong internal relation with corporate financing decisions.This paper establishes multi-dimensional linear regression models to examine the relationship between cash flow and financing behavior of listed companies in China.Empirical results reveal that, listed companies will rely first on internal funds to meet their financing needs.When internal funds are depleted,they will issue equity or lower the leverage.We proposes a new concept of "cash profit" which combine the information both from cash flows and accrual earnings, the connotation and superiority of cash profit is analyzed.Based on empirical studies,we exam the impacts of cash flow on capital structure decisions,the results prove the application of cash profit is more effective.Thus the problem of the linkage between cash flows and financing policies can be solved sufficiently.