Free Cash Flow And Corporate Value From The Perspective Of Complementary Assets

Cash flow and corporate value are two important concepts for enterprise.This paper aims to study corporate value from free cash flow.The relation between them has been studied much.However,with the development of the times and integration of resources,the source of corporate value is far beyond the original elements.Therefore,it is meaningless to study the cash flow and the enterprise value.In recent years,complementary assets have a significant impact on enterprises,and cash flow,corporate value are closely linked.Complementary assets have already appeared,but the academic circles have not yet formed a heated discussion about it.In view of the status of complementary assets,this article will research orientation in the field,hoping to find a new relationship between cash flow and enterprise value and new meaning of the establishment of complementary assets to cash flow and enterprise value.In order to realize the hope,this paper selects Shanghai A shares of listed companies as samples,the sample data of 2011-2015 from the database.The paper uses market value to represents corporate value,corporate free cash flow and assets ratio as the free cash flow index.R&D to total operating income ratio,fixed assets to total assets ratio,the cost of sales revenue than before and average executive salary to average employee compensation ratio respectively measure complementary assets in four dimensions:creative technology,manufacturing,marketing,human resources.There are three models of an empirical study.The empirical results show that free cash flow is negatively correlated with firm value,that is,the higher the free cash flow,the lower the value of the enterprise.About complementary assets dimension,only manufacturing complementary assets and corporate value are significantly passively correlated.Others have positive correlation.What is the moderating effect of the four kinds complementary assets on the relationship between free cash flow and firm value?The conclusion shows that the negative relationship between free cash flow and enterprise value is negatively affected by manufacturing complementary assets.Because of the specificity of the dimension,the asset will lead to increase innovation and maintenance costs.Market based complementary assets have a positive impact on the relationship between free cash flow and firm value.Marketing complementary assets require the creation of strong sales channels,to create a good customer experience.It can get benefit and influence the relationship between free cash flow and enterprise value.Unfortunately,there is no significant test on the moderating effect of innovation technology and human complementary assets.Facing the direction of free cash flow,we still need to consider human resources especially high-end talent as the company’s scarce resources will bring keen decisive for enterprise decision-making ability,good order management ability.Unique innovative technology will enhance the core competitiveness of enterprises,promote enterprise value.Free cash flow as the performance of enterprise value creation should be returned to investors.Poor use will reduce the value of the enterprise.However,if the enterprises use this part of the cash flow to build the market,innovative technology complementary assets and increase human resources,to some extent,it will save the status quo of agency problem to reduce the value.Based on the above empirical results,this paper argues that we should pay more attention to the content and structure of complementary assets,as well as the direction of free cash flow.It can not only create cash flow,but also change the quantity and quality of the original cash flow.Complementary effects of complementary assets and basic assets can build a higher level of core assets,and enhance the value of enterprises.