Research On Cash Flow Risk In Real Estate Industry In China

With the continuous development of the theory about the corporate finance,the goal pursued by the enterprise management has been transferred from the maximization of assets and profits to the maximization of value.Cash flow is like the blood of corporations.It affects both business investment activities and long-term developments of the company.When the cash flow management is done without reasonable care,it will affect corporations' basic cash turnover.And cash risks will be exposed.Company sometimes will sell assets or borrow high-interest loans.Even it will lead to bankruptcy.The cash flow risk in the company's operating conditions reflects the effectiveness of corporate financial management,and influence the maximization of business value.The real estate industry needs a lot of capital investment in project development.Once the cash flow is in shortage,it will lead to project stagnation and eventually affect the daily business activities of the company.With the increasingly frequent promulgation of the regulation and control policies for real estate industry,the cash flow risk of the real estate industry has been gradually increased.Therefore,this article is significant for the real estate to research the risk and manage the cash flow.This essay is constituted with four parts.First part is summarizing scholars'research and opinion about cash flow risk.The second part is for providing some theoretic support by making some theory exploration from three aspects:1.The definition of the cash flow.2.Cash flow management strategy;3.The internal and external factors that may affect the cash flow risk.The third part is empirical analysis.By choosing 6 comparable comparnies from large,middle and small real estate company,and selecting the period from early 2007 to early 2017,building a CFaR model in chronologically order is for measuring the cash flow risk of the real estate industry.And the relationship between cash flow risk and beta coefficient of real estate companies is explored.Finally,factor analysis and multiple linear regression models are used to analyze the factors that affect the cash flow risk of real estate companies.The fourth part aims to summarize conclusion and defects of the empirical analysis,and provide some measures for the real estate industry to improve the cash flow management.This study found that:corporations may face different types of the cash flow risk though they might be similar in operating conditions.The beta coefficient of large-scale real estate companies is not much different,but in small and medium-sized enterprises,cash flow risk and beta coefficient are negatively correlated.It is judged that there is positive correlation between the real estate industry's leverage ratios and the cash flow risks,and there is a negative correlation between the corporation's ability of paying its debt and the cash flow risks.Therefore,we should improve the financing,investment and inventory management system to reduce the probability of cash flow risks.