Empirical Study Of Financing Constraints Of Listed Companies In Cement Industry In China

Financial crisis originated from the U.S.in 2008 created a huge impact on the economy of China. Export-oriented economy in China had been facing a severe test, as external economic environment worsened. In order to promote economic development, Chinese government implemented loose fiscal policy, investing 4 trillion Yuan for infrastructure construction, social insurance, unemployment insurance, expanding domestic demand and stimulating economic development. As a non-metallic building materials industry, cement industry plays an important role in China's modernization and urbanization. The prospects for the cement industry and infrastructure construction, urban development and urbanization process have a strong positive correlation. Therefore, the cement industry in the context of the economic crisis still prospected. In cement industry, investment rose, the market competition became fiercer.At the same time, fierce competition of product, increased important-renewable resource constraints and environmental degradation make the improvement in core technology, adjustment and optimization of industrial structure and energy conservation as the themes of today's industries. Cement industry as a high-energy consumption industry, naturally became one of the objects of the adjustment of industrial policies.Therefore, in the context of the economic crisis, a more optimal development of the cement industry under the guidance of industrial policies became worthy of study.In this paper, data was collected from 20 listed companies (listed in Shanghai and Shenzhen Stock Exchange Market) in the cement industry from 1995 to 2006. Investment-cash flow sensitivity was taken as a measure of financial constraint indicators.Data was processed by Eviews6.0 measurement analysis software. Through empirical analysis of panel data of the cement industry, we found that financing constraints existed in these listed companies. We used the classification of assets and liabilities rate and classified the sample companies into high debt ratios and low debt ratio companies.We found that sensitivity of investment-cash flow of the sample companies with high debt ratio was more obvious.Thus financing constraints was significant in listed companies in the cement industry. Empirical analysis also showed that the cement industry investment in listed companies relied on credit. A higher degree of investment depended more on short-term loans. In the motivation test part, we found that financing constraints of listed companies in cement industry was not due to the agency costs generated by the conflict between shareholders and managers, nor is it due to the agency costs generated by the conflict between shareholders and creditors.Based on the evidence, effect of a single quota control of investment in credit in the cement industry will be weakened because of the shift of enterprises to internal funds.Lower operating efficiency companies with higher assets and liabilities rate might fall into financial difficulties if we only raised the cost of credit in the cement industry. This is not conducive to the establishment of a fair and impartial competitive environment. Therefore, the regulation of investment of the cement industry requires an integrated solution. To reduce the financial constraints, the cement industry enterprises can diversify financing means, for example, financing in the form of equity which also can reduce companies'dependence on bank credit. Less dependence on bank credit helps banks controlling the credit risk of the enterprises in the cement industry and reduces the bank's systemic credit risk in the cement industry.As for the factors of financing constraints for the cement industry, this article took it as "institutional factors",but the article failed to make further analysis and interpretation of "institutional factors",and this is the limitations of this study.