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The Research Of Free Cash Flow,Financing Constraints On Corporate Investment Behavior

Posted on:2015-07-23Degree:MasterType:Thesis
Country:ChinaCandidate:R TangFull Text:PDF
GTID:2309330461493391Subject:Accounting
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According to the MM theory,in a perfect market,the company’s internal financing costs and external financing costs are irrelevance.However,in reality capital market,due to asymmetric information,agency problems and transaction costs,the internal financing costs and external financing costs are not consistent,then making the company subject to financing constraints.The company’s decisions are sensitivity to free cash flow when it was influenced by financing constraints or agency problems,the scholars explain that,there are two main reasons,one is underinvestment which was caused by the symmetric information theory and the another is overinvestment which was caused by principal agent theory.In this paper,it proposed the reasonable assumptions which based on the theoretical analysis and literature review.Then it put forward the empirical model by summarizing the existing models.This article carried out descriptive statistics,correlation and regression analysis by using the financial data which was from Shanghai and Shenzhen A-share market’s 11 industry and 954 companies from 2010 to 2012 as sample.After that,this paper analyzed the factors that influenced financing constraints and builded financing constraints functions.Then it calculated the financing constraints level of different industries and analyzed the sensitivity of investment-free cash flow under different financing constraints level.According to the empirical,this dissertation comes into the following conclusions:There is a positive correlation between free cash flow and the company’s investment expenditure and free cash flow is an important influencing factor of investment expenditure.There is also a positive correlation between investment expenditure and financing constraints,but financing constraints is not the primary reason,and the phenomenon of underinvestment and overinvestment exist in the listed company.Different industries faced different financing constraints,the financing constraints of the traditional industry gradually increased while the new trade industry gradually weakened.As the extent of financing constraints enhanced,the extent of investment-cash flow sensitivity is also enhanced.Based on these research findings,this article considers that the company should enhance the ability of development,improve the corporate value and the efficiency of capital,consummate the information disclosure mechanism,strengthen the transfer capability of internal and external information,mitigate financing difficulties and expand financing channels.
Keywords/Search Tags:Free cash flow, Financing constraints, Investment behavior
PDF Full Text Request
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