Research On The Impact Of Fiancial Slack On The Investment Scale In Manufacturing Industry

When corporates’ financial resources have exceeded its minimum requirements, it will lead to financial slack, which consists of cash and liabilities slack.With the integration of the global market, China’s economy links closely with the world, any serious emergencies in other countries will have a significant impact on China’s economy.So having a certain financial slack is essential for our corporates to cope with the external risks.However, if corporates’ financial slack is over a certain limitation, it will result in high cost, low efficiency, "occupation" of the actual controllers etc, which have attracted the attention of domestic and foreign scholars.Throughout the domestic and foreign related literature, we find that scholars have mainly focused on the financial slack, cash holdings and liabilities slack affecting the company performance and scale of investment. There are some few scholars who have researched contingency effect of the relationship between corporate’s financial slack and the scale of investment under the role of the new project investment risk and investment opportunity.Therefore,based on previous studies, this paper chooses 549 manufacturing A-share listed companies in Shanghai and Shenzhen from 2006 to 2014 as research objects, combining normative research and empirical research,to further study the relationship between the level of financial slack, its composition structure and the scale of investment, and contingency effect of the relationship between level of financial slack, its composition structure and the scale of investment under the role of the new project investment risk and investment opportunity.This paper is divided into six chapters, the specific contents are as follows:Chapter 1: IntroductionFirst, this chapter describes the background and significance of this study, then introduces research content, frame, and methods, finally puts forward innovations of this paper.Chapter 2: Literature review of financial slack and analysis of the basic theoryFirstly, the concept, classification and origin of financial slack are described and the definition of the investment, investment opportunities and new project investment risk are explained; Secondly, the domestic and foreign literature related to financial slack are reviewed and commented; At last, the information asymmetry theory, pecking order theory and principal agent theory are used to deeply analyze the relationship between financial slack and its structure and the scale of investment.Chapter 3: Research design of effect of financial slack on the scale of investment in the manufacturingFirst of all, investment status of China’s manufacturing industry is analyzed; Secondly, based on the theoretical analysis of the second chapter, we put forward the research hypothesis of the relationship between financial slack and its structure and the scale of investment and the moderating effect of new project investment risk and investment opportunity on the relationship between the two parties; Again we measure the scale of investment, financial slack and its structure, investment opportunities, new project investment risks, the size of the company and the proportion of largest shareholder and other research variables; Finally,the research model has been establish using the variable adding method.Chapter 4: Empirical study of effect of financial slack on the scale of investment in the manufacturingFirstly,we determine the source of the sample and get the empirical sample of this paper according to the selection principle; Secondly trend analysis and correlation analysis to the selected sample are used;Thirdly we use regression analysis to study the relationship between financial slack and its structure and the scale of investment and the moderating effect of new project investment risk and investment opportunity on the relationship between the two parties; Finally, robustness test was made to the results of regression analysis.Chapter5: Strategies and measures for the development of manufacturing industry under the new economic normalAccording to the previous theoretical and empirical analysis, the papers draw the conclusion. And based on this, We put forward certain countermeasures and measures for the development of the manufacturing industry under the new economic normal.Chapter 6: Study limitations and prospectsAt the end of the paper, we discuss the shortcoming of the paper and put forward key issues for further study.