Financial Flexibility, Financing Decision And Dividend Distribution Of Chinese Listed Firms

Since the1930s enterprise flexibility theory produced, its theoretical research related to production operation management, organizational behavior theory, strategic management, and risk management and other areas. In the area of financial management, financial flexibility research began from a study of Modigliani and Miller (1963) for the relationship between taxation and optimal capital structure. According to the U.S. Financial Accounting Standards Board’s view, financial flexibility is the ability to take effective action to change the amount and timing of cash flows when met non-expected demand or investment opportunities. Under the uncertainty of the external environment and internal decision-making, financial flexibility, as an integrated capability of enterprise financial system, has become an important way to respond to market uncertainty and take advantage of future investment opportunities. Brounen etc.(2004) and Denis (2012) found that financial flexibility has been considered the most important factor in the company’s capital structure decisions from the United States and Europe CFO survey.This thesis consists of five parts which proceed as follows:Part Ⅰ introduces the background and significance of the research, describes the contents and methods of the thesis and provides the possible innovations. Part Ⅱ reviews extent literature about financial flexibility, financing decisions and dividend policy in and abroad and has a sort summarized commentary. Part Ⅲ introduces the relevant basic theory, and explores the relevance of financial flexibility, the financing decision and cash dividends under the semi-compulsory dividend institutional background. Part Ⅳ is the empirical study part. Firstly it describes sample selection and data source, followed by modeling, defining the relevant variables, then describes the data statistical analysis, and finally verifies the hypothesis using regression analysis, and makes associated test. Part V presents the major conclusions, makes recommendations accordingly and proposes the limitations.Using data for Chinese listed companies in stock markets of Shanghai and Shenzhen over the period2009-2011, this thesis mainly researches the impact of financial flexibility to financing decisions and cash dividends under the background of "semi-compulsory dividend policy" the SFC issued. This thesis results in three dimensions:1) the enterprises which need financial flexibility prefer to equity financing.2) the enterprises which need financial flexibility do not prefer to distribute cash dividends, while the enterprises which have enough financial flexibility reserve prefer to distribute cash dividends.3) semi-compulsory has the impact to cash dividends distribution.This thesis makes four innovations to extant literature.1) used the concept of marginal value of financial flexibility, learned from Fama and French (1998)’s classic regression model of calculating enterprise value of financial flexibility in order to measure the need of enterprise financial flexibility.2) from the perspective of financial flexibility, provided a new theoretical explanation and empirical support for a focus of financing behavior of listed companies-equity financing preference.3) based on existing literature, the conclusions on the impact of financial flexibility on the cash dividend distribution is different, this thesis studies the impact of both marginal value of financial flexibility and financial flexibility reserve on the cash dividends and comprehensively examines the relevance.4) in order to combine with our unique background and financing qualifications control system, this thesis further discusses the impact of the semi-compulsory dividend policy on the financial flexibility and cash dividends, provide empirical test for policy implementation results...