| As a "Monitor" that reflect the operating status of cash flow in a corporate, cash flow risk has become an important factor for corporate’s life and death. The survival and development of a corporate could stay along without either the market environment it rely on or the competitors and collaborators in the market. Product market competition could make the instability of corporate operating via the taking in corporate’s competitive behavior, than cause the abnormal fluctuation of its cash flow, and ultimately show the impact on corporate cash flow risk.Utilizing data of Chinese listed companies in the sample of A-shares during 2008-2013, This paper analyzes the impact of product market competition on corporate cash flow risk. The empirical results show that:In general, the slighter product market competition is, the higher their cash flow risk is. For the firm in poor market performance, this relationship is more obvious. Considering the financial constraints, it is found that financial constraints exert a moderating effect in the process of product market competition influencing corporate cash flow risk and that the cash flow risk is more susceptible to the product market competition if the firm suffers financial constraints. Furthermore, the cash flow risk of those enterprises in the competition position of both poor market performance and high financial constraints is extraordinarily vulnerable to the degree of monopoly of product market. As for enterprises in other competition position, competitive market seems to be the necessary environment for their sustained and stable operation. In addition, the paper makes a endogenous inspection between the product market competition and financial constraints, as well as the cash flow risk and financial constraints. This research provides a theoretical reference for firms to locate themselves precisely, to recognize cash flow risk, and to adopt countermeasures when taking part in the product market competition. |
PDF Full Text Request