Financing Constraint,Financial Flexibility And Corporate Performanc

In recent years, the adjustment of economic policies, the yuan appreciation, inflation, etc., are all drastically changing business environment. Meanwhile, China’s enterprises are still subject to market transformation, social changes and the impact of government regulation, which making the environment more complex. Actually, there exists asymmetric information and transaction costs, especially the lagging behind of China’s capital market development, internal and external financing costs of enterprises varied significantly. The problems mentioned above make a company face financing constraints problems When coping with environmental uncertainty and access to capital markets for raise funds. Therefore, enterprises must maintain an appropriate financial flexibility in order to respond flexibly to adverse shocks as well as take advantage of profitable investment opportunities in the future. Financial flexibility is still a relatively new research area, which is drawing increasingly attentions of practitioners and theorists in the international community. Based on, this thesis intends to make depth and systematically research of the financial flexibility from entry point of the financing constraint which China’s listed companies generally faced with.This thesis consists of5parts which proceed as follows:Part Ⅰ elaborates the background and significance as well as the innovations of this study, describes the contents and methods of the thesis, and at last provides the innovations to the literature of financial flexibility at home. Part Ⅱ reviews extent literature about cost stickiness in and abroad. Part Ⅲ is the empirical study between financing constraint and financial flexibility. Firstly, examining the impact of financing constraints on corporate financial flexibility reserve behavior. Secondly, revealing the difference that operating cash flows are used to reserve financial flexibility in different financing constraint conditions. Part IV is the empirical study between financial flexibility and corporate performance. Firstly, analyzing the buffering and agency effect of financial flexibility. Secondly, verifying the inverted U-shaped relationship between financial flexibility and corporate performance. Thirdly, studying the regulation of financing constraint. Part Ⅴ concludes the major results, and point out the limitations as well as further research directions.In this thesis, we take data for China’s listed companies in stock markets of Shanghai and Shenzhen during the period of2007-2011as the results are as follows:1) Companies generally maintain a certain financial flexibility. Furthermore, the more severe financing constraints, the more cash flow sensitivity of financial flexibility;2) The company facing financial constraints will gives priority to reserve financial flexibility to meet future investment demand, followed by the current investment spending with its internal cash flows;3) Financial flexibility has an interval effect on firm performance. Moderate financial flexibility plays an active buffering effects, and excessive financial flexibility has negative agency influences;4) Financing constraints can strengthen the buffering effects of financial flexibility,and inhibit its agency effects.The three innovations of this thesis are as follows:1) Revealing the internal impact mechanism of financing constraints on the financial flexibility, expanding the study on influencing factors of financial flexibility;2) Examining the inverted U-shaped relationship between financial flexibility and corporate performance, which enriching the research on economic consequences of the financial flexibility;3) Providing further empirical evidence to support the inhibition role of financing constraints on the agency problem.