Research On Incurrence-Effect Of Firm Performance Optimization Based On Panel Model

As a part of the assets, the substantial of the free cash flow directly related to thesurvival and the development of enterprises. The cash circulation in enterprise is justas the blood circulation in body, any obstacles of the circulation will affect the normalproduction and the operation of enterprises, even result in financial crisis. In order tomaintain the sustained and healthy development, the enterprises have to ensure thatthe circulation of current free cash flow and future free cash flow are normal. In thefinancial management, the present value of future free cash flow can be used toestimate the current company value, and the current company value is affected by thefirm performance, therefore, the value of company can connect the free cash flowwith firm performance, which highly values the research on incurrence-effect of firmperformance optimization.Firstly, the paper points out the meaning and the purpose of the research onincurrence-effect of firm performance optimization; secondly, by summarizing therelated theory and literature of domestic and overseas, this paper illustrates that therewere few research which based on the enterprise performance to study the enterprisefree cash flow, especially the research on comparative study between a number ofindustries. Based on this, this paper choose the A share of the public utilitiesenterprises and the electronics industry companies of the stock markets of Shanghaiand Shenzhen as the object of study, through the comparison the significantdifferences between the two samples, this paper put forward the hypothesis that thecompany’s ownership structure and the asset size can produce different effects on theincurrence-effect of free cash flow by constraining the variable space of the firmperformance optimization; Then, through using the EVIEWS panel data analysismodule，this paper analyzes the correlativity, and verifies the incurrence-effect of firmperformance optimization.The empirical results support that there is a relationship between theincurrence-effect of free cash flow and the firm performance optimization，but, inthe two samples, the incurrence-effects are different. In the public utilitiesenterprises, the incurrence-effect shows as income effect, but the effect coefficient issmall. The company’s ownership structure and the asset size of public utilities enterprises have indirect influence on the free cash flow distributing by constrainingthe variable space of the firm performance optimization. But in the electronicsindustry enterprises, the incurrence-effect shows as capital effect, the effect coefficientis relatively large，but the ownership structure and the asset size of electronicsindustry enterprises have not indirect influence on the free cash flow distributing byconstraining the variable space of the firm performance optimization. The conclusionproposes the hypothesis.In the last part, this paper analyzes the causes of the differences between theutilities and the electronics, and summarizes the outcomes. According to theconclusions, this paper gives suggestions to help enterprises to improve the quality ofthe free cash flow by optimizing firm performance, and points out the limitations ofthis study and directions in the future research.