Research On Information Of The Cash Flow Statement And Investment Decisions

For a long time, Chinese enterprises have been focusing on the analysis of the balance sheet and income statement when they make investment decisions, but pay no attention to the analysis on information of cash flow statement, leading to the use of enterprises cash flow statement that can not be an effective tool. And the company's investment decisions is an important core of the financial decisions. Generally, in the process of investment decisions, people only are tied up the category of investment contents themselves, they think they will be all right if they can control risks and profits of investment decisions. The relationship of cash flow and investment decisions only is confined to the relationship of capital investment decisions and the cash flow that the capital investment produces. There is absent of deep theoretical recognition on which corporate cash flow reflecting finance health situation affects the investment decisions.This paper is dedicated to the research of the relationship between the information of the cash flow statement and investment decisions. First of all, this paper analyzed the function that the cash flow statement can add the balance sheet and a profit statement theoretically; Secondly, in the full understanding and grasp of the theory, this paper analyzed the cash flow information and its influence on investment decisions; finally, on the basis of theoretical analysis above, this paper built regressive equation respectively, and empirically checked the relationship of the function of the cash flow statement and investment decisions of listed companies in China.On the aspect of the function of the cash flow statement affecting investment decisions, this paper first according to the traditional neo-classic investment theoretical model, checked if investment decisions of China's listed companies was sensitive to the information provided by the balance sheet and income statement, the result indicate that the significance of model is not well. Then, adding the information of cash flow statement on the basis of the traditional neo-classic investment theoretical model, checked the relationship of investment decisions and the information provided by the cash flow statement. The empirical results showed that: the significance of the model increase clearly, and the information provided by the cash flow statement can indeed play a role of supplementary explanation of the balance sheet and income statement, and the information was very important for enterprises to make investment decisions. Finally, in order to improve the investment decisions'level, put forward the suggestion that how to perfect information of cash flow statement.