Research On The Impact Of Financial Flexibility On Enterprise Growth

After the early extensive development of Chinese enterprises,gradually exposed the lack of stamina,low growth of enterprises,in the face of increasingly complex and changeable enterprise environment,how to improve enterprise growth has become the primary task of the development of Chinese enterprises.The growth of an enterprise is influenced by many factors inside and outside the enterprise.The materialist dialectics believes that internal factors are the fundamental reasons for the change and development of things.External factors act through internal factors,so the internal factors of the enterprise are the main factors affecting the growth of the enterprise.The enterprise resource-based view holds that the resources owned by the enterprise are the basis for the growth of the enterprise.Among them,the financial resources are the most important among the various resources.It is the basis for other resources of the enterprise to play a role,and is the blood that sustains the survival and development of the enterprise.In order to achieve healthy growth,enterprises must be able to effectively deal with financial risks and seize investment opportunities,and scientifically allocate and timely adjust financial resources with scarcity.Financial flexibility is a kind of financial dynamic ability under this premise,which is the main reason for promoting the development of enterprises.However,there is currently no research on the impact of financial flexibility on enterprise growth in academia.Therefore,based on the theory of endogenous growth and dynamic capability,this study regards financial flexibility as a dynamic capability of the enterprise,and uses the research method combining normative analysis and empirical test to study the direct impact of financial flexibility on enterprise growth.Uncertainty is the basic characteristic of the enterprise environment,and it is the premise that the enterprise’s flexible ability plays its role.Enterprises will be affected by environmental uncertainty in the process of financial strategy selection and decision-making,and the financial risks it brings may affect the healthy growth of enterprises.Therefore,this study combines the financial contingency theory to examine the regulatory role of environmental uncertainty in the impact of financial flexibility on enterprise growth.Top management team is the main body of enterprise’s financial strategy selection and decision-making.The difference of individual characteristics among team members can provide more comprehensive information for enterprise’s financial strategy selection and decision-making,thus improving the quality of enterprise’s decision-making and promoting the healthy development of enterprise.Therefore,this study combines high-order theory to examine the regulatory role of top management team heterogeneity in the impact of financial flexibility on enterprise growth.Firstly,the direct effect of financial flexibility on enterprise growth is discussed.This paper reviews the related concepts and theories of enterprise growth and financial flexibility.Based on the theory of endogenous growth and dynamic capability,this paper theoretically analyzes the mechanism of financial flexibility’s impact on enterprise growth,and then selects manufacturing enterprises listed on the A-share motherboard of Shanghai and Shenzhen from 2007 to 2016 as samples,constructs the theoretical model of the impact of financial flexibility on the growth of enterprises.Through the panel data fixed effect model test,we find that the overall development trend of listed enterprises in China is good,and most of them have certain growth.Financial flexibility is the embodiment of dynamic capability theory in the financial field.Enterprises can reserve financial flexibility in advance by maintaining a higher cash holding level and a lower debt ratio.Financial flexibility has an important positive impact on enterprise growth.The role of financial flexibility prevention attributes and utilization attributes is conducive to improving the growth of enterprises.Through the variable substitution method and the combination of enterprise life cycle theory,the theoretical model is tested for various robustness.The test results confirm that financial flexibility does have a positive impact on the growth of the enterprise.Although there are differences in the financial flexibility and enterprise growth of the companies at different stages of the life cycle,it does not affect the positive impact relationship between the two.Secondly,based on the important role of environmental uncertainty in enterprise financial strategy selection and decision-making,and on the basis of financial contingency theory,environmental uncertainty is incorporated into the research framework of financial flexibility and enterprise growth.On the basis of theoretical analysis,this study chooses the manufacturing enterprises listed on the A-share motherboard of Shanghai and Shenzhen from 2007 to 2016 as the sample,constructs a theoretical model of the relationship between environmental uncertainty and the impact of financial flexibility on the growth of enterprises,and makes a multiple regression analysis of the theoretical model,and tests the environment through the fixed effect model of panel data.The robustness test of the theoretical model is carried out by the variable substitution method.The test results confirm that the research results are robust.The research results show that environmental uncertainty plays a positive role in the positive impact of financial flexibility on the growth of the enterprise.The higher the environmental uncertainty,the stronger the financial flexibility promotes the growth of the enterprise.When the environment faced by the enterprise is uncertain,the enterprise can use the financial flexibility of the reserve in advance to adjust the financial strategy of the enterprise in time to protect the development of the enterprise.When an enterprise encounters adverse impacts from environmental factors,financial flexibility can make the enterprise survive the crisis smoothly by maintaining a higher cash holding level and a lower debt ratio in advance,adjusting the capital structure in time,and reallocating financial resources rationally.;When enterprises find potential favorable investment opportunities,enterprises that have previously reserved financial flexibility can quickly raise funds,seize favorable opportunities,and achieve steady growth of enterprises.Finally,based on the important role of top management team in enterprise financial strategy selection and decision-making,and on the basis of higher-order theory,the top management team heterogeneity is incorporated into the research framework of financial flexibility and enterprise growth.From the perspective of managerial cognition of dynamic competence,the concept of top management team heterogeneity is introduced.,and analyzes the moderating role of top management team heterogeneity in the impact of financial flexibility on enterprise growth.On this basis,taking manufacturing enterprises listed on Shanghai and Shenzhen A-share motherboard in China from 2011 to 2015 as samples,the theoretical model that top management team heterogeneity regulating the impact of financial flexibility on enterprise growth is established,and discuss the moderating role of top management team heterogeneity in the impact of financial flexibility on enterprise growth from five dimensions of top managers’ demographic characteristics: gender,age,education level,tenure and overseas background.On this basis,the theoretical model is analyzed by multiple regression,and the relationship among top management team heterogeneity,financial flexibility and enterprise growth is tested by panel data fixed effect model.The robustness test of the theoretical model is carried out by the variable substitution method.The test results confirm the robustness of the research results.The research results show that top management team heterogeneity has a significant regulatory effect on the positive impact of financial flexibility on enterprise growth.Gender heterogeneity of TMT positively regulates the relationship between financial flexibility and enterprise growth,and increasing gender heterogeneity will enhance the positive impact of financial flexibility on enterprise growth;age heterogeneity of TMT negatively regulates the relationship between financial flexibility and enterprise growth,and reducing the degree of age heterogeneity will enhance the positive effect of financial flexibility on enterprise growth;education level heterogeneity of TMT negatively regulates the relationship between financial flexibility and enterprise growth,and reducing the education level heterogeneity of TMT will enhance the positive impact of financial flexibility on enterprise growth;tenure heterogeneity of TMT negatively regulates the relationship between financial flexibility and enterprise growth,and reducing the tenure heterogeneity of TMT will enhance the positive impact of financial flexibility on enterprise growth;the overseas background heterogeneity of TMT positively regulates the relationship between financial flexibility and enterprise growth,and increasing the degree of heterogeneity of overseas background will enhance the positive impact of financial flexibility on enterprise growth.The innovations of this study are mainly reflected in the following three aspects: First,financial flexibility and enterprise growth are integrated into the same framework,which verifies the factors of financial flexibility affecting enterprise growth and broadens the theoretical boundaries of enterprise endogenous growth.At present,the research on the factors affecting enterprise growth mainly focuses on the field of strategic management,and there is no literature on the factors affecting enterprise growth from the perspective of financial flexibility.Environmental uncertainty is the basic characteristic of the enterprise environment.In order to cope with financial risks,seize favorable investment opportunities and ma ke rational use of scarce financial resources,enterprises must reserve financial flexibil ity beforehand so as to effectively allocate and timely adjust financial resources to me et the needs of capital for enterprise growth.Based on the theory of enterprise endogenous growth,this paper constructs a theoretical framework of the impact of financial flexibility on enterprise growth,and enriches the research content of factors affecting the enterprise growth.Secondly,based on the financially flexible economic consequences,this paper studies the mechanism of the effect of financial flexibility of enterprise reserve on enterprise growth,and enriches the study of economic consequences of financial flexibility of enterprise.At present,domestic and foreign scholars’ research on financial flexible economic consequences mainly focuses on investment and financing behavior and corporate performance.There is no research on the impact of financial flexibility on corporate growth performance.Based on the dynamic capability theory,this paper studies the impact of financial flexibility on enterprise growth,and improves the content of the study on the economic consequences of financial flexibility of enterprises.Thirdly,the environmental uncertainty and the top management team heterogeneity are included in the research framework of the relationship between financial flexibility and enterprise growth,and the mechanism of the relationship between financial flexibility and enterprise growth is further clarified.Based on the theory of enterprise endogenous growth and dynamic capability,this paper constructs a logical framework of the relationship between financial flexibility and enterprise growth,combines financial contingency theory and high-order theory,and studies the regulatory role of financial flexibility and enterprise growth from the perspective of environmental uncertainty and top management team heterogeneity.Based on the above,the theoretical analysis and empirical research results of the impact of financial flexibility on enterprise growth show that this study is helpful for the government to improve the capital market construction,reduce the financing constraints of enterprises,provide a broad financing platform for the development of enterprises,create a favorable external environment for the development of enterprises;it is helpful for enterprises to pay more attention to financial flexible reserve,strengthen the identification and grasp of the enterprise environmental uncertainty,optimize the senior management team structure,and formulate a reasonable enterprise human resource development strategy;it is conducive for investors to grasp and balance the enterprise growth.Enterprise growth is the necessary condition for investors to invest successfully.Through the observation of financial flexibility,environmental uncertainty and top management team heterogeneity,enterprises with development potential and investment value can be identified accurately and judged accurately in time.