Manufacturing Listed Companies Financed By Internal Cash Flow And Investment Scale Of The Relationship Between Empirical Research

The financing and investment activities are playing an essential role in the development of corporations, the establishment of the capital market in China broadens the external financing channel and has became one of the driving engine for company growth. However, the Chinese capital market is still in a developing phase, there exit considerate of flaws in regulations, which serve to the financing constraints for the corporations. This paper mainly focuses on the internal cash flow and investment relation, which can well portrait the financing constraints under different ownership structure. The two topics this paper discussed are the investment-cash flow sensitivity in group affiliated companies versus independent companies, investment-cash flow sensitivity in state-owned companies versus non-state-owned companies.Group enterprise which has the internal financial market, tend to utilize the listed companies as financing platform to optimize the resource configuration in the group. This behavior can upgrade the efficiency of the resource configuration for the group as a whole, one the other side, this behavior deteriorates the risk of benefits expropriation. Based on the empirical research, this paper concluded that group enterprises suffer from significant financial constraints, moreover, the difference of financial constraints between group enterprise and non-group enterprise is significant, indicating the general risk-aversion of the external investor toward group enterprise's benefits expropriation.Since the economy regime of China varies widely from those of developed countries, the initial motivation of establishing capital market is helping the state-owned companies with their cash-flow problems. Therefore, the ownership of controlling interest becomes one of the crucial factors when concerning the financial constraints. However, this paper didn't conclude a unified results by its empirical research. The explanation might attribute to the massive bank loan rush into the state-owned companies during financial crisis which distorted the correlation between internal cash flow and investment.Finally, this paper splits the data into different group according to their ownership structure, and investigates whether financial leverage, total asset and Tobin's Q will impact the correlation between internal cash flow and investment significantly.This paper using dynamic panel data as the empirical research methodology, exerted to find out the correlation between internal cash flow and investment under different ownership structure. Moreover, the author explains the result for theoretical and implementation level.