Research On The Impact Of Financial Flexibility On Company Performance From The Perspective Of Life Cycle

One of the obvious features of the macroeconomic environment is full of uncertainty.None of the business operations can avoid the uncertainty from the external environment.The uncertainty of the external environment will affect the business and have an important impact on the company's business decision-making,investment decisions.Financial flexibility is considered to be an ability to help the corporation better deal with uncertainties in the business process.Financial flexibility refers to the enterprise has the ability to adjust the corporate cash and cash flow to deal with business uncertainty so that enterprises should deal with the adverse impact of the future or favorable investment opportunities.The problem that how does the financial flexibility effect the performance of the company has been no conclusive conclusion so far.Some studies have shown that financial flexibility has a positive impact on corporate performance due to use effects,prevention and coping effects.And the others pointed out that flexibility is not only a positive impact on corporate performance,but also a high level of financial flexibility will lead to the seriousness of agency costs,so that the impact of financial flexibility on corporate performance has a range effect.This paper believes that enterprises in different stages of growth,its business behavior has its unique.In the study of financial flexibility on the impact of corporate performance is necessary to combine the growth phase of the enterprise to have a specific and detailed analysis.Therefore,this paper explores the impact of financial flexibility on corporate performance from the perspective of different growth stages of enterprises.This paper studies the impact of financial flexibility on corporate performance in different life-cycles.Firstly,the paper reviews the related literature,such as Financial Flexibility,the relationship between the Financial Flexibility and the Corporate Performance and the Life cycle theory.We make a research based on the Main Board Market listed companies from 2010 to 2015,and use three commonly used life cycle division methods and match each other to determine the sample company's life cycle.And then,Research the impact of financial flexibility on corporate performance at different stages of growth.The empirical results show that the financial flexibility level of the mature company is significantly higher than the growth period and the recession period.However,there is no significant difference in the financial flexibility between the growth and the recession.In addition,the impact of financial flexibility on corporate performance will vary due to the life-cycle of the firm.The empirical results show that the company's performance in the growth period increases with the increase of financial flexibility;the financial flexibility of enterprises in the mature stage has the effect of interval effect on the performance of the firm.That is,within a certain degree of financial flexibility,the company's performance improve with the increase of the financial flexibility.When the financial flexibility level exceeds the threshold,the company's performance decreases with the increase of financial flexibility.And the financial flexibility of the enterprise in the recession stage has no significant effect on the firm's performance.