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Finance Constraints, Asset Sales & Cash-Cash Flow Sensitivity

Posted on:2017-03-03Degree:MasterType:Thesis
Country:ChinaCandidate:S J JiangFull Text:PDF
GTID:2309330485493075Subject:Finance
Abstract/Summary:PDF Full Text Request
Financing constraints problem, in recent years, is an important area of company financing research field. Most domestic and foreign empirical studies presently are based on the perspective of the investment-cash flow sensitivity model, for from the perspective of the cash flow sensitivity of cash to analysis financing constraints problems is seldom be used, especially whether the model is applicable to China’s special capital market is still in the validation phase. Financing constraints are related to the company’s development, and domestic and foreign scholars have accumulated a large number of theoretical research and practical experience on how to ease the financing constraint, especially for equity and bond financing (these two common sources of financing). But in recent years as the capital market become more actively, financing through the sale of assets is applied in practice more and more commonly, while the theoretical study on asset sales is very rarely.Because of the above, this article attempts to make relations between assets sell and financial constraints of domestic listed companies to carry out research in order to make the financing constraints add some possible additional findings. This essay bases on cash-cash flow sensitivity basic model and cash-cash flow sensitivity extended basic model, adding proxy variable of asset sales, then constructs two cash-cash flow sensitivity models in the basic of asset sales, to study the effects of asset sales on the degree of financial constraints of China’s listed companies. In this study, it is also be concerned about the difference of financial constraints under different nature of property rights and different economic cycle, as well as the different influence of asset sales for various categories of listed companies.Based on China’s A-share non-financial listed companies of Shanghai and Shenzhen from 2001-2014 as the research sample, using the SA index which is defined as the index of financing constraints, the sample was divided into high and low financing constraints financing constraints groups:companies with high-degree financing constraints and companies with low-degree financing constraints. And our empirical result shows that the cash-cash flow sensitivity can be as a standard for the financing constraints, the higher degree of cash-cash flow sensitivity, the more serious financing constraints is. On the basic of above, by using the cash-cash flow basic model and extended basic model, we study whether asset sales can ease the listed companies’ financing constraints. The major conclusions are as follows:(1) There is a significant positive cash-cash flow sensitivity in China’s listed companies, which shows that China’s listed companies commonly exist financing constraints; (2) Asset sales can ease listed companies’ financing constraints, and by degree the higher financing constraints company eased the more constraints than the low financing constraints company; (3)There are significant differences on the degree of financing constraints, compared to the state-owned company, asset sales can ease the degree of private listed companies’ financing constraints more significantly; (4) In the economic downturn financial constraints the listed companies faces are more serious than in the economic departure, and In the economic downturn,the ease effect about asset sales is more significant.
Keywords/Search Tags:Financing constraints, Cash-cash flow sensitivity, Asset sales, Nature of property rights, Economic cycle
PDF Full Text Request
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