Ultimate Controller, Product Market Threats And Financial Flexibility

The study of financial flexibility is an emerging issue in corporate financial management, there are many issues to be explored and studied. Noulas&Georgios Genimakis (2014) for the United States and Europe,CFO survey found that financial flexibility is the most important factor when considering the company’s capital structure decision. Especially after the global financial crisis, enterprises are facing huge strategic discontinuities and environmental uncertainty and maintain appropriate financial flexibility, help enterprises to respond flexibly to unanticipated adverse shocks to enhance corporate value. Financial flexibility value relevance in the international arena has gradually become a major concern and attention of new topics. However, domestic financial flexibility related research is still in its infancy, few theoretical studies of the system. Business all the time is not in the product market competition, the face of fierce market competition whether companies will reserve more financial flexibility to deal with uncertainty in the event, in addition to the corporate governance factors, taking into account the characteristics of the ultimate controlling person listed in our company ubiquitous, and they realize the real control of the enterprise through a series of control chain, so in basic research product market competition and financial flexibility reserves relationship, study characteristics affect their ultimate controlling relationship is important.This paper is organized as follows:The first part of the introduction. This section introduces the research background and significance, contents and methods used in the article and make innovations in this paper.The second part of the literature review. This part of the domestic and foreign literature review and summarize the literature review describes the basic theory of financial flexibility (flexible finance-related questionnaires, definitions and sources of financial flexibility, access and maintain financial flexibility, financial flexibility metrics), product market flexible literature review of competition and financial (cash flexible product market competition and product market competition and liabilities flexible), the ultimate controlling person, product market competition and financial flexibility literature review (separation of ownership, flexible literature review product market competition and financial; nature of property rights competition and flexible literature review of financial products on the market) during the literature review and summary of the literature on the basis of the existing literature review.The third part, the theoretical analysis.The theoretical basis of this paper include control and cash flow separation of powers theory, theory of constraints, such as financing, then the separation of flexible relationships with financial and product market competition are two rights,product market competition, financial flexibility and the nature of property rights, product market competition and flexible theoretical analysis of the relationship between financiaLProvide a basis for hypotheses and research design.The fourth part, the study design.Through theoretical analysis of previously proposed hypothesis of this paper,and thus build research model, select the appropriate variables based on the model,and the sample collection and sample processingThe fifth part, the empirical analysis of results.First, the sample has been processed descriptive statistical analysis, the study validated the initial hypothesis, then more than two yuan to build the model regression analysis, correlation test, on "the extent of the product market competition, companies need to maintain the financial flexible; compared with state-controlled enterprises,the degree of non-state controlled enterprises in the product market competition positive effect on the financial flexibility stronger;greater the degree of separation of the ultimate controlling person of control and cash flow rights,product market competition on the financial flexibility the positive effect is stronger "and other hypotheses provide empirical evidence, and finally the use of variable substitution method for model building were robust test. Part VI, the conclusions and inspiration. Through the front paper analyzes the results of empirical research studies draw conclusions and propose further measures and recommendations herein may be concluded research and innovation as well as shortcomings.In this paper, from2007to2012China’s Shanghai and Shenzhen A-share listed companies as samples, the researchers found that:(1) China’s listed companies generally maintain certain financial flexibility, more intense product market competition faced by companies more inclined to reserve more financial flexibility.(2) Compared with the state-controlled enterprises, the degree of non-state controlled enterprises in the product market competition on the financial flexibility of the positive effect stronger. That is, faced with fierce market competition, the state-owned holding enterprises and state-holding enterprises compared to non-reserve additional financial flexibility; the larger (3) the degree of separation of the ultimate controlling person of control and cash flow rights, product market competition on the financial flexible stronger positive effect. That is, faced with fierce market competition, the serious agency problems companies will reserve additional financial flexibility.There are two main innovations in this paper:(1) reveals the product market competition mechanism of financial flexibility inherent influence for corporate management to fully understand the financial flexibility to make financial decisions provide scientific reference for.(2) combined with the ultimate control of China’s listed companies ubiquitous human characteristics, in analyzing product market competition and financial flexibility reserve relations, answered the ultimate controlling mechanism of action of the product market competition and financial flexibility reserves, enriching the financial flexibility research reserves.