Financial Flexibility Impact On Corporate Investment Efficiency

The aspects of economy, politics, culture is increasingly close in today’s society,the increasing integration make business environment facing many challenges, and the survival of these enterprise become more uncertain in this complex international environment. In order to enhance the ability to cope with the uncertainty, the enterprise also should maintain a certain flexibility during normal operation. In china,most of the companies are facing financing constraints condition, which was demonstrated by domestic scholars. The shortage of financial resources make the enterprise loss some value-added investment opportunities, and even affect the efficiency of investment. When the enterprise faces disadvantages, such as The financial crisis, the reserved financial flexibility can ease the Financial difficulties and catch the valued investment in the disadvantages. The existing of the financial flexibility can ensure the full use of the internal funds to avoid the missing opportunities under the sustainable development which can improve efficiency of investment. Recently, the research about financial flexibility is under widespread attention especially the relationship between the financial flexibility and enterprise investment. But the former research focus on the relationship between the financial flexibility and Business investment spending or hot to impact the efficiency of investment. This article set up from the sensitivity between the investment opportunities and investment spending to measure the impact of the previous reserve financial flexibility on Investment efficiency of whole enterprise. What’s more, the happening of financial crisis creates effective environment for testing the ability of prevention and using of financial flexibility. to show the disadvantages of financial flexibility, this article set the times of crisis between 2007 and 2009 and the content as follows:The first chapter is a brief introduction about the structure and content of this article. And we set the increasingly complexity and uncertainty in Business environment as background to discuss the related problems.The second chapter is focus on the existing of financial flexibility, including the rationality and necessity. Following is the conclusion about the related literature at home and abroad.The third chapter is the research hypothesis under the topic of this article.Referring to other research, we construct two basic model and the selection standard of variables required.The fourth chapter is to choose sample to support the view. The enterprise which has the financial flexibility can improve the investment efficiency during crisis. And this improvement is influenced by the restraint of corporate finance and governance efficiency. This impact is more obvious in higher restraint of corporate finance and governance efficiency. Besides, we can prove these investment is valuable by testing the investment of enterprise with financial flexibility.The last chapter is a summary of this article, and the revelation and expect getting from this research.The innovation of this article is the research of the relationship between the financial flexibility and enterprise investment, and setting examples to prove the promoting effect of previous reserve financial flexibility. Excepting that, we also argue adjust action of financing constraints for flexible financial and investment efficiency. We also test investment efficiency in the aspect of enterprise performance to provide proof supporting for the above conclusion.