The Study Of Corporate Investment And Financing Behavior Under Inflation

Based the real options for the basic theoretical framework, this paper investigate that the inflation affect the various factors of company’s investment decision, and then study the impact of inflation on the Company’s investment behavior. At the meantime, put the Income tax considerations into investment decision-making and analysis of how income tax changes effect investment behavior. Based on the modeling of the company investment decisions in the case of moderate inflation, study the investment decision-making process in the case of hyperinflation. Analyse the different investment behaviors under the different inflation conditions. Find that rising inflation will inhibit the company’s investment behavior, when hyperinflation is expected to increase in frequency and occurrence degree occurs, it will also inhibit the investment..With the conclusions of the investment decision-making model, use the actual data of listed companies in China to do the empirical test. Firstly combine with our first inflation time series chart; briefly descript the historical process of China’s inflation. Secondly select the appropriate samples from the listed companies, and determine the financial indicators of the explanatory variables and the explanatory variables. Use the change in China’s corporate income tax as the cut-off point to study the effect of inflation and other factors to the company’s investment behaviors. Then examine how changes in tax rates affect the investment behaviors. Finally, use the private enterprises as the research object, analyze the impact of inflation on the investment behaviors of private enterprises, and analyze the difference with other kinds of companies. Whether the carrying value of fixed assets increased or purchase of fixed assets Net cash outflow as the index of investment in fixed assets, whether private enterprises or other kinds of enterprises, the empirical results have confirmed the negative correlation between investment in fixed assets of the company and increase of inflation, as well as investment in fixed assets of the Company and the income tax rate.Inflation also has an impact on corporate finance line. Not only the funds that accumulated in corporate operating, but also the cash from the external, e.g. liabilities, equity financing, can be used to investment. But there is cost for financing and the costs are different with different financing methods. It makes the company must solve two problems:the need for financing and how financing is optimal. By the capital structure point, construct a unified investment and financing model to get the optimal financing behavior and optimal capital structure. The analysis revealed that the rising of inflation will increase the level of the Company’s asset-liability ratio; corporate income tax increase will reduce the company’s gearing ratio.Use the change in China’s corporate income tax as the cut-off point, empirical test the theory, study the effect of inflation and other factors to the behavior of corporate finance and capital structure before changes and after changes. The rate of inflation, the rise in income tax rates will inhibit the behavior of corporate finance. The empirical study on the capital structure also confirms the conclusions of the model.Finally, based on the perspective of corporate governance, use the private enterprise as the research object, analyse the impact of inflation on the financing behavior of private enterprises, and different with other companies.