Research On Financial Flexibility And Investment Efficiency

Investment activity is an important part of enterprise financial activities. The efficiency of investment is directly related to that whether enterprise can achieve the optimal allocation of resources or not, whether production factors can achieve the optimal combination or not. To improve enterprise investment efficiency, not only it can help enterprise to bring more investment income, but also it will improve the market value of the firm and conducive to long-term development for enterprise. Since the reform and opening up, with the rapid development of economy, the new investment opportunities continue to emerge, the way to quickly grasp the good investment opportunities has always been the concerns of the business. Corporate financial flexibility, it means that the ability for enterprises to deal with the sudden events and mobilize the financial resources in the uncertain future. Financial flexibility of enterprises is the ability of companies to cope with the uncertain problem of future. It can help enterprises to seize the good investment, so more and more enterprises begin to study the financial flexibility. However, due to the many factors in the market, such as the global financial crisis, asymmetric information, agency problems, which will have an impact on Corporate financial flexibility and investment efficiency. Therefore, this study based on the angle of financial flexibility to2007-2013in Shanghai and Shenzhen A-share listed companies as samples, and use the standardized analysis, descriptive statistics, univariate analysis, correlation analysis and multiple regression analysis to study the relationship between corporate financial flexibility and investment efficiency.Firstly, the study described the theories and concepts that related the efficiency of investment and financial flexibility. On this basis, This paper studies the financial flexibility and efficiency of business investment, And take the empirical research combined with the results. The study use the fitted values to measure the financial flexibility, and establish the model to evaluate the efficiency of business investment. Secondly, The study use the different models to evaluate the affect between the corporate financial flexibility and investment efficiency which conclude the over-investment and under-investment. The results are as follows:(1) Corporate financial flexibility does not affect the over-investment behavior of enterprises;(2) Good financial flexibility can help companies reduce underinvestment behavior. Finally, Based the empirical results of financial flexibility and investment efficiency, the study put forward some policy suggestions that improve the efficiency of investment. In addition to increased the focus on financial flexibility of company, the Government should help companies improve the efficiency of financing, and establish the early warning mechanism that improve financial flexibility.