An Research On The Effect Of Financial Flexibility On Corporate Performance

Because of increasing environmental uncertainty and the presence of external financing constraints leaded by capital market imperfections, enterprises must maintain appropriate financial flexibility when making financial policies to grasp profitable investment opportunities at any moment in uncertain environment, or to respond to adverse shocks flexibly and to achieve the enterprise value maximization better. Thus enterprises' maintaining a certain degree of financial flexibility can affect the grasp of investment opportunities, and financial flexibility reservation also affect corporate performance. So can the financial flexibility enhance the corporate performance by affecting the investment behavior? Studying this problem can help us to understand the possible mechanism of financial flexibility to corporate performance.Firstly, based on uncertainty theory, asymmetric information theory, signaling theory and real options theory, this paper analyzes how financial flexibility have an influence on corporate performance, how financial flexibility impact on corporate investment and the intermediary effect analysis of the mechanism of corporate investment, then proposes the research hypotheses; after that this paper selects relevant data of a-share listed companies of Shanghai and Shenzhen Stock Exchange from 2010 to 2013 as research samples, builds the multiple linear regression model and makes empirical analyses to research the hypothesis through descriptive statistics,correlation analysis, regression analysis and testing of the mediating effect. Finally,based on the empirical analysis and the research conclusions, this paper puts forward relevant policy recommendations.The research finds that: firstly, financial flexibility have positive correlation with corporate performance, namely, enterprises' maintaining a certain degree of financial flexibility is beneficial to improve corporate performance, illustrating that enterprises' reservation of financial flexibility is valuable; secondly, financial flexibility have positive correlation with corporate investment, which means enterprises' reservation of a certain degree of financial flexibility can promote investment expenditure, illustrating that financial flexibility can help enterprises to seize more investment opportunities in the future; thirdly, corporate investment has partial intermediary effect when financial flexibility impacts on corporateperformance. This paper has well demonstrates that reserving a certain degree of financial flexibility can help companies to catch more valuable investment opportunities in the future and deal with risks, so as to improve the business performance of enterprises.