The Impact Of Free Cash Flow On The Overinvestment Of Transportion Industry

As the separation of ownership and controller in modern corporation, the problem ofagent in serious. There are more and more concerns on free cash flow andoverinvestment caused by agent. In China, the transportion industry is the basicindustries of the national economy and social develolment. The of developmentindustrialization, informatization, urbanization, marketization and internationalization,put forward new and higher requirements for transportation investment returns. Inrecent years, China’s economy has maintained repid growth, the transportiona industryappears the overinvestment prolbem. There are so many resons affect the overinvestmentof transportion industy,but In this paper, we choose this factor of Free cash flow,toresearch the relationship between the company’s free cash flow and excessiveinvestment of China’s transportation. The results show that, if there is more free cashflow in the transportion corporation, the overinvestment is more serious. The robust testhas been done in this paper, and the result are the same.The company’s investment decisions and investment effects rely on its investmentenvironment, so this paper study the relationship between the transportation companiesfree cash flow and excessive investment from the perspective of the investmentenvironment. The research results show that the worse investment environment in theregion, the over-investment of free cash flow is more serious.