Research On The Correlation Between Free Cash Flow,Capital Structure And Corporate Value

The Yangtze River Delta region consisting of Shanghai,Jiangsu Province and Zhejiang Province is the region with the fastest economic growth,the highest level of urbanization and internationalization in China,and an important hub for the implementation of the "One Belt,One Road" strategy.Especially since the State Council's strategy on "integration of the Yangtze River Delta" was put forward,the Yangtze River Delta urban agglomeration has once again become the direction of the national economy.With the superior Jianghai port,efficient transportation system and all-round support of advanced science and education culture,the Yangtze River Delta region has explored a unique development path and has also produced a large number of high-quality listed companies.As we all know,listed companies are an important driving force for the regional economy.The degree of activity of listed companies also represents the advanced level of the regional economy to a certain extent.The company's development is inseparable from the support of cash flow.For listed companies,cash flow is the company's "blood." At home and abroad,those high-value listed companies with outstanding reputations all have sufficient cash flow to support the daily operation of the company.On the contrary,when the financial crisis came,the break of cash flow led to the bankruptcy and bankruptcy of many listed companies.From the perspective of financial indicators,the most comprehensive reflection of the final operating results of listed companies is free cash flow,which can more accurately and objectively reflect the value creation ability of listed companies,reflecting the maximum distributable cash without affecting the company's continuous operation.To reflect the actual surplus of listed companies.However,free cash flow is also a "double-edged sword" for listed companies.Although high-scale free cash flow can reflect the good operating performance of listed companies,due to the separation of management rights and ownership of listed companies,excessive free cash flow can easily lead to agency costs,which will undoubtedly be for companies with listed companies.The value causes great losses.Usually in this case,according to Jensen's"Liability Control Hypothesis",debt financing is widely used at home and abroad,and the agency cost is reduced by acting as a supervisory and controlling function of liabilities to enhance the company's value.This paper starts with the free cash flow,capital structure and company value of listed companies in the Yangtze River Delta region,explores the current development status of listed companies in the Yangtze River Delta region,and verifies the listed companies in the Yangtze River Delta by analyzing the correlation between free cash flow and company value.Whether free cash flow plays a role in promoting the value of the company,and at the same time introduces the capital structure.When there is agency cost and free cash flow cannot enhance the company's value,it is verified whether the method of debt financing can significantly reduce the agency cost of listed companies in the Yangtze River Delta.And the results of the research in the Yangtze River Delta region provide reference for other regions in China.