Empirical Study On The Relationship Between Financial Flexibility And Enterprise Value In Real Estate Industry

At present,China's economy is situated in a significant transformation period.The accelerating process of globalization has made the market increasingly competitive.Coupled with more and more stringent control policies,uncertainty of the operating environment in the real estate industry has further increased,especially in financing.Millions of thousands of firms are facing serious financing constraints problems.At the same time,financial flexibility,as a new research field,has attracted more and more attention from the theoretical and practical fields,because of its ability to coordinate internal and external resources,arrange the distribution of time and the number of cash flow reasonably,alleviate the pressure from the shortage of funds effectively,optimize the allocation of resources and resist risks.Based on such an environment,this paper takes financing constraints as a cut-in point,the data of the listed companies in the real estate industry from 2011 to 2015 as research samples,using Fama and French's classic enterprise value regression model,to study the relationship between financial flexibility and enterprise value in more depth.The results demonstrate that financial flexibility of our real estate companies always sustain at a relative low level and significant differences are existed in different enterprises.Apart from that,financial flexibility do augment the firm value substantially.After adding the intersection item of financing constraints and financial flexibility,the financial flexibility has a more obvious effect on promoting enterprise value in those companies with high financing constraints,which indicates that financial flexibility management implemented in those firms would be proved to be more practical.According to the empirical results,this paper puts forward some suggestions on how to implement financial flexibility management to break through the financing constraints and boost the enterprise value.First of all,relevant departments should not only accelerate the process of regulating financial innovation in the real estate area but also continue to optimize our social credit system in order to create diversified financing environment,promoting the sustainable development of the whole industry as well as enterprise value.Secondly,real estate enterprises should be fully aware of the importance of financial flexibility.On the basis of making the most use of the existing flexible financial resources,Firms should encourage innovation andintegration of divergent resources constantly and cut down cost.Finally.the real estate enterprises have different capital requirements in different life cycles and project development stages,which bear huge pressure coming from different levels and types of financing constraints,so arranging flexible financial strategies and improving the service efficiency of financial flexibility is of great importance.