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Analysis to the Association between Investment and Internal Cash Flow of the Corporations

Author: ChenZuo
Tutor: LiSuXian
School: Shenyang Normal
Course: Political Economics
Keywords: Investment spending Internal cash flow Relevance Tobin 's Q value Manufacturing
CLC: F275
Type: Master's thesis
Year: 2011
Downloads: 69
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Abstract

Theory of corporate investment and financing has been a hot discussion and research scholars study corporate finance business investment is the focus of attention of scholars. They have also made a lot of research, and has made many achievements. Corporate finance no more than two channels, external financing and internal financing, including internal financing as an important source of corporate low-cost funds, have an important impact on business investment. Do this as an important indicator of the internal financing capacity by examining internal cash flow and corporate investment spending to explore and verify the impact of the internal financing of business investment. This article is based on re-defined investment expenditures, internal cash flow, according to the hypothesis of external financing constraints and agency costs of free cash flow hypothesis relationship of theoretical analysis, and China's Shanghai and Shenzhen A-share manufacturing 2006-2009 industry listed company data analysis for the sample of manufacturing listed companies in China's investment expenditures and internal cash flows, and the factors that affect the relationship between investment expenditures with internally generated cash flow correlation test, which established the multiple regression model, regression calculating the correlation coefficient of each factor, and to verify the relationship between investment spending and internal cash flow sensitivity. In addition, by introducing cross terms caused this sensitivity relationship dynamic inspection, roughly draw the following conclusions: (1) general visits between China's manufacturing industry listed company investment spending its internal cash flow, there is a strong the sensitivity relations, internal cash flow positive role of business investment. (2) the motivation of the investment spending of China's manufacturing industry listed company and its internal cash flow sensitivity test show that simple motive test can not draw significant regression results, that is to say, we can not have to proceed from the overall sample The clear conclusion Specific support external financing constraints hypothesis, or free cash flow agency cost hypothesis. Clear conclusions drawn need to further refine the empirical test research and analysis, which is the focus and direction of our future empirical research work. Based on the results and conclusions of the above analysis, we know that external financing constraints hypothesis agency costs of free cash flow hypothesis, the starting point of the theory is based on the behavior of both information asymmetry. So, by reducing the behavior of both the degree of information asymmetry, optimize the investment and financing behavior, improve social efficiency of resource allocation is proposed in this paper corresponding policy recommendations, and discussed, respectively, from the three levels of government, capital markets, and the enterprises themselves.

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