An Empirical Study On Relationship Among The Process Of Marketization、the Nature Of Ultimate Ownership And Working Capital Aggressiveness

In the academic field, former scholars tended to focus on the company’s long-term financial decisions, such as policies on capital structure, dividend policy, investment decision-making and so on. They pay less attention to the study of short-term working capital. working capital policy as one of the important day-to-day short-term financial management activities has not been aroused enough attention from scholars and research, but in real life, working capital is a topic that has always been discussed, if lack of proper working capital management policies, enterprise is likely to be in crisis. Be too aggressive or too conservative can make a difference. In order to maximize shareholder’s value, working capital strategy plays a very important role. To formulate a proper working capital strategy, the understanding of the influencing factors is inevitable. According to today’s domestic and foreign research on the influencing factors of working capital management,we found that previous study focused on the influencing factors of comprehensive working capital policy, and the component of working capital policy (working capital investment strategy and financing strategy), respectively, has less research literature. Given the influencing factors of the overall working capital should affect the component of working capital policy at the beginning, so the study of the influencing factors of the policy respectively has important significance. Other researches mainly focused on the influencing factors such as industry and enterprise micro characteristics, ignoring the special institutional background in China. Based on this, this paper puts forward the following questions:what are the factors that lead to different working capital enterprises in different companies? Whether the Institutional environment and the Nature of Ultimate Ownership can affect the working capital investment and financing strategies? This paper aims to answer these questions. In order to solve the above problems, this paper introduces related literature about the working capital influencing factors. By means of theoretical and empirical analysis, this paper study the relationship among the marketization process、the Nature of Ultimate Ownership and Working capital Aggressiveness, In this paper, the main content is as follows:The first chapter is about the introduction. Included four parts, the first part introduces the research background of this article, put forward the problems that the paper aim to answer, the second part introduces the research purpose of this paper and the research significance, The third part introduces the research methods and structure arrangement. The fourth part is about the research innovation and its limitations.The second chapter is about literature review and basic theories. The first part introduces the working capital component and overall working capital influencing factors related literature at home and abroad. The review found that domestic and foreign literature research mainly focused on the influential factors such as macroeconomics, micro characteristics and industry but seldom study the outside institutional background. The second part is about the related basic theory and a brief overview of its links with the working capital investment and financing strategy. Specific related theory including:debt financing contract theory and principal-agent theory, asymmetric information theory, the government hand of plunder, soft budget constraint theory, institutional environment and firm behavioral theory. Its contact mainly displays in:according to the debt contract theory, the existence of bankruptcy threat effect will motivate managers to reduce financial risk, thereby, forces managers to make more conservative working capital financing policy. But if bankruptcy threat effect of debt wants to play a role, the debt should have effect. but according to the soft budget constraint theory, in the state-owned holding companies, the government deprived the power of creditors to send the financially troubled companies to go bankrupt, so the effect of the debt threat on the state-owned holding enterprise has been weakened, so compared to the non-state owned enterprises the state-owned enterprise tend to adopt more aggressive working capital financing policy. Second, according to the information asymmetry theory, the information asymmetry will produce moral hazard, which means the borrowers can cause risk for the lenders, so under such situation, information asymmetry reduced debt availability, the marketization process speed the process of information symmetry, which in turn can improve the debt availability, in that the short term debt financing is still the main financing method in our country, enterprises tend to raise the level of working capital financing. Finally, according to the hand of plunder theory and principal-agent theory, government intervention in the enterprise is mainly to reach the political goal, as a result of these political goals, enterprise’s investment in long-term assets increases, thus making enterprise choose more aggressive working capital strategy, on the other hand, the state-owned enterprise managers tend to choose a more aggressive working capital investment strategy after weigh the risks and benefits for their own management behavior.The third chapter is about the analysis and hypothesis. This part includes two quarters. The first section is mainly introduce to this article the definition of three noun:the marketization process, the Nature of Ultimate Ownership and Working capital Aggressiveness, This section also introduces the recent situation of The Process of Marketization and the Nature of Ultimate Ownership in China, illustrates that state-owned holding company is a major part of the listed company in our country and there exists significant differences between different regions, this paper points out the special institutional background provides a rare opportunity for this study, then after combined our special system background and the basic theories, this section puts forward four hypothesis, as follows:(1) compared with non-state owned enterprise, state-owned enterprise tend to adopt more aggressive working capital financing strategy.(2) The marketization process and working capital financing policy aggressiveness was positively related.(3) Compared with non-state owned enterprises, state-owned enterprises tend to adopt more aggressive working capital investment strategy.(4) The marketization process and working capital investment strategy policy aggressiveness was negatively related.The fourth chapter is about the source of research data and the definition of the variables.The fifth chapter is about the empirical results and its analysis, the model this paper established proved the former four hypotheses. The research results show that there is significant relationship among The Process of Marketization, the Nature of Ultimate Ownership and Working capital Aggressiveness, and the results is consistent with the hypothesis proposed in this paper. The model also passed a certain degree of robustness test.The sixth chapter is about the research conclusions and policy recommendations. This part includes three quarters, the first quarter summed up the relationship among The Process of Marketization, the Nature of Ultimate Ownership and Working capital Aggressiveness, the Second quarter puts forward the relevant policy recommendations:(1) the article concluded that the state-owned enterprise tend to be more aggressive on working capital investment and financing strategy, after considering its reasons:soft budget constraints, government intervention, this section put forward several concrete Suggestions:the government should eliminate various policy burdens to the firms; Reduce government intervention in the financial system and financial institutions, strengthen the government’s financial constraints; Reduce government intervention, make the boundary between the government and market clear, accelerate the reform of the state-owned Banks, encourage the development of non-state owned bank, small and medium-sized financial institutions, facilitate the financing of the non-state-owned enterprises.(2) In view of the marketing process’s influence on working capital investment and financing strategy, this section puts forward the following Suggestions:develop the corporate bond market, prompt the development of capital market development; Enterprises should remain alert to risks in the process of marketization, daily operations should retain appropriate "margin of safety". The third section describes the limitations and direction for future researches, the limitations mainly are about the data source, variable selection, and the applicability analysis. Then this article pointed out the future research can investigate The Process of Marketization, the Nature of Ultimate Ownership and comprehensive Working capital Aggressiveness and the object of study can be extended to other more industry.Compared with the existing literature, the contribution of this paper is mainly about:(1) This paper discussed The Process of Marketization and the Nature of Ultimate Ownership’s influence on working capital investment and financing strategy, provides a new perspective for the working capital research and a theoretical reference for the understanding of the working capital policy.(2) This paper uses the marketization index to measure enterprise’s external environment; It studies its influence on the working capital investment and financing strategy, which enriched the theory about the institutional change’s effect on the enterprise in transition economy.