Research On The Impact Of Financial Elasticity Of Manufacturing Listed Companies On Profitability

After the financial crisis in 2008,numbers of researches began to stress on the company's ability to cope with the financial crisis and seize the investment opportunities,among which financial flexibility is an important aspect.Existing papers explained the financial flexibility of listed companies from the view of cash holdings,internal capital structure and external financing constraints,and has provided the basis for corporate governance.In latest years,the states continuously tighten bank credit and strive to reduce financial leverage level.Because of supply-side structural reforming and deleveraging,credit resources switch from the enterprises with excessive debt amount to individual who have the willingness and ability to repay mortgage.Meanwhile,since the start of 2010 so far,China's economic growth has continuously been degrading for eighteen quarters.In counter with both of narrowing source of capital and reducing investment opportunities,to discuss whether the financial flexibility of listed companies ensures profitability the economic downturn from the perspective of financial flexibility is the study of this issue.Via selecting data of 427 manufacturing companies which listed on the Shanghai Stock Exchange from 2013 to 2015,1242 samples were acquired as the research object,these data proved that these listed companies with financial flexibility had higher profitability.In this paper,profitability index are constructed by PCA.Find that 55.8%of the sample companies are negative and 44.2%are positive,both the average and median of the samples are negative.The empirical results show that The higher the financial flexibility,the higher the profitability of the enterprise:Holding reasonable cash amount will enhance the financial flexibility of listed companies,and then improve their profitability,unless the cash holding is much more than debt due within a year;Legally bound debts will reduce financial flexibility by taking up the company's funds and damage the profitability,while keeping appropriate capital structure and unused capacity of borrowing enhances companies' financial status via creating a loose external financing environment;Stable CFO and active investment and financing policies are conducive to improving profitability;The combination of ownership concentration with checks-and-balances policy ensures that managers'decision-making brings highest interests for stockholders.Finally,according to the conclusions,the corresponding countermeasures and suggestions are put forward.