Financial Background Of Senior Executives,Institutional Environment And Financing Constraints

Funding is the blood of enterprises and the source of power to support the survival and development of enterprises.Financing constraints are the common problems faced by Chinese enterprises and have become an important obstacle to the development of enterprises and the economic transformation and upgrading.Since the concept of financing constraints was first defined in 1988,the factors that affect the financing constraints and how to ease the financing of enterprises has become the focus in theory and practice.In the course of several thousand years of development,China's economy and society have undergone tremendous changes.However,the traditional "relationship"culture has not died down under the impact of industrial civilization and the market economy."The relationship" still affects all aspects of economic and social development as an informal institution.Based on the impact of "relationship" on the corporate finance,this paper studies whether the relationship between the corporate and the financial institutions established through the employment of executives who have financia!background can play an important role in alleviating the financing constraints.At the same time,any individual is in a specific institutional environment,and many studies have proved that the institutional environment has an impact on corporate behaviors.At this stage,the institutional environment in our country is not yet perfect and there are great differences in the level of regional institutional development.In this background,whether the institutional environment can affect the level of financing constraints also has important theoretical and practical value.In addition,testing the interaction between internal financial linkages and the external formal institutional environment in releasing the financing constraints of enterprises also helps to enrich the understanding of the relationship between formal and informal institutions in influencing business practices.This paper takes the sample of A-share listed companies in China from 2008 to 2014,and conducts the following empirical tests in order to provide empirical evidence for the above research questions:(1)Use the proportion of senior executives with financial background to measure the financial relationship of the enterprises and test the influence of senior executives' financial background on the financing constraints of the enterprises.(2)Test the impact of the institutional environment on the financing constraints.And the institutional environment was measured by the ranking of the institutional environment of the city in which the enterprise registered.(3)Examine the interaction between the institutional environment and senior executives' financial background in alleviating corporate financing constraints.Firstly,the paper reviews the research literature and the theoretical foundation of the financing constraints,the executives' background and the institutional environment,and puts forward the hypothesis of this article.Based on the cash-cash flow sensitivity model of Almeida(2004),this paper builds a basic model and introduces the senior executives,financial background and institutional environment as independent variables.Using multivariate linear regression analysis,this paper examines the independent and interactive effects of the two factors in releasing financing constraints.The results show that:First,employing senior executives with financial background can effectively ease the level of financing constraints.Second,enterprises in areas with good institutional environment face a lower level of financing constraints.Third,the executives' financial background and institutional environment play an alternative role in alleviating financing constraints.In areas with good institutional environment,the financial background of senior executives has less effect on the financing constraints.The main contributions of this paper are as follows.First,this paper studies the impact of the informal institution on financing constraints from the perspective of financial affiliation.Second,this paper introduces the regional institutional environment indicator that represents the formal institution and examines its independent influence on the financing constraints and how it works on the relationship between senior executives'financial background and financing constraints.Third,in this paper,the micro factors that affect the financing constraints of enterprises are combined with the macro economic factors to test the interaction mechanism between formal and informal institution ininfluencing the financial situation of enterprises.Therefore,this article provides a new perspective for the study of corporate financing constraints and enriches the results of relevant research.