State Ownership,Financial Constraints And Dynamic Adjustment Of Working Capital

Working capital is the link between the survival and development of enterprises.Excellent working capital management efficiency can't only bring financial benefits for the enterprise itself,but also ensure that enterprises is outstanding in the more and more fierce competition.China Chain Store&Franchise Association and PricewaterhouseCoopers jointly released the 2016 China retail enterprise working capital management research report which gives us a lot of inspiration.After 20 years of rapid growth,the root of the problem of the retail industry began to highlight.In this process,some enterprises' sales are in negative growth,and some enterprises face financial chain fracture threat.Working capital management issues become the core problems managers face.In addition the Ernst&Young's survey also showed that the unreasonable working capital management caused huge losses in cash unnecessarily tied up in working capital of major companies in Europe and the United States.In the past working capital management was measured by static indicators,such as operating income and profit margins which don't meet the requirements any more.Today,working capital management is a dynamic management process.Therefore,enterprises need to apply more new ideas and tools to solve and improve management capabilities.Past research has focused on working capital itself and the relationship of working capital and enterprises' performance.Those researches are from the static point of view,ignoring the impact of dynamic management of static results,so it is very important from a dynamic perspective to explore the changes in working capital.The theoretical analysis shows that the enterprises'working capital holds the best at the optimal value to make the value of enterprise hold the best.However,working capital is constantly changing,so why to change in working capital and how to change is the research incision in this paper.Accurate and efficient working capital management is crucial to be engaged in activity of the day-to-day business and to ensure realization of corporate value maximization.The adjustment of working capital is affected by the internal and external environment conditions.Financial constraints can significantly affect the dynamic adjustment process of the working capital of enterprises.Different financial constraints determine the different working capital adjustment behavior.In addition,the special economic system makes state ownership become a very distinctive institutional background in China.Another reform of state-owned enterprises in 2015 is bringing out new development and challenges.There are many differences between state-owned enterprises and non-state-owned enterprises due to absence of control right,management tendency,financing discrimination and budget soft constraints.The nature of property rights can often affect the degree of financial constraints.Therefore,the dynamic adjustment of working capital is significantly different.This paper is based on the two main lines to start the research of dynamic adjustment of working capital.Further,this paper continues to explore the way of adjustment of working capital to provide a viable path for enterprises which is a meaningful exploration.Based on the dynamic adjustment model of working capital,this paper uses the non-equilibrium panel data of A-share listed companies from 2003 to 2015 to test the difference of dynamic adjustment behavior of working capital under different conditions.This paper first examines the heterogeneity of the different degree of financial constraints on the speed of adjustment and the degree of deviation.Then,by distinguishing the nature of different property rights,we can further examine the difference of the dynamic adjustment of working capital under the nature of different property rights.Finally,the article examines the way of adjustment of the working capital of the enterprise in which the enterprise adjusts the working capital.In order to ensure the reliability of the research conclusion,the article adopts a variety of empirical methods and carries on the robustness test.The empirical results show that the financing-constrained enterprises are more active in the management of the working capital than the non-financing enterprises,and the working capital is adjusted more quickly and deviates less.At the same time,the nature of property rights can significantly affect the relationship between financial constraints and dynamic adjustment of working capital.Specifically,compared with state-owned property rights,working capital of non-state-owned enterprises is adjusted more quickly.At the same time,non-state-owned enterprises have less deviation from working capital under financial constraints.In addition,this paper also proves that the adjustment of inventory and accounts receivable is the main way for enterprises to carry out dynamic adjustment of working capital.On the contrary,enterprises generally do not adjust their working capital through accounts payable.The conclusion of this paper can't only make enterprises attach importance to working capital with the new concept to enhance the working capital management ability,but also contribute to further research on expanding working capital management.