A Research On The Impact Of Corporate Governance On Financial Flexibility

with the globalization speeding up, financial system of different countries are penetrating. Competition and cooperation relationship between enterprises is deepening. Enterprises are faced with the economic and financial environment of increasing systemic risk and uncertainty. In a highly uncertain business environment, the capital structure strategy taken by enterprises must be affected inevitably. In order to enhance their cash flow adjustment ability and low-cost financing ability in the future, promoting enterprise to cope with the future uncertainty risks and seize the favorable investment opportunities, more and more companies maintained a higher financial flexibility. A company has a higher level of financial flexibility, usually refers to the high cash holding rate or low financial leverage.A lot of study on financial flexible show that the financial flexible have a positive effect on resisting risk, investment and financing level and performance of enterprises, and this effect is outstanding during the period of financial crisis. At the same time, some empirical studies found that financial flexibility has a negative impact on investment ability, performance and enterprise value, because of principal-agent issues. In order to study the cause of the paradox, this paper adopt a multivariate linear regression model and fixed effect panel analysis method, and use a 2005-2014 financial data of 681 listed companies for 10 years in a row to study the phenomenon of company financial flexibility. In view of the related literature indicate that principal-agent issues led to financial flexibility, and the severity of principal-agent issues depends on the level of corporate governance, this paper introduces variables related to corporate governance to the model of flexible financial, studying the effect of corporate governance on financial flexibility. As generally acknowledged, governance efficiency of private enterprises is significantly higher than that of state-owned enterprises, so we divide our sample into two parts of state-owned enterprises and private enterprises, and find that financial flexibility is negatively related to the level of corporate governance, and compared with the state-owned enterprises, financial flexibility of private enterprise promote the company's future investment more effectively. The results show that the discretion of the company financial flexibility is negatively related to the effectiveness of corporate governance, and its role in promoting the company's future investment is significantly influenced by corporate governance efficiency.