The Empirical Study On The Effect Of Financial Flexibility On Inefficient Investment

Since the outbreak of the financial crisis in 2008,the global economic environment is in turmoil.Because China's capital market is not very perfect,coupled with the increasingly fierce competition in the enterprise,the mixed ownership reform of stateowned enterprises and inflation.The development of enterprises in China is difficult.Therefore,the lack of corporate investment and excessive investment are very common.Lack of investment and excessive investment collectively referred to as inefficient investment.Inefficient investment has a lot of serious consequences.It will harm the interests of stakeholders,reduce the efficiency of resource allocation,hinder the development of enterprises in the future,and even affect the social development and progress.Therefore,it is urgent to do research on the improvement of inefficient investment and find out the factors that can restrict the inefficient investment.It is necessary for enterprises to take precautions ahead of schedule to reserve financial flexibility to deal with a series of challenges.At present,China's enterprises do not pay enough attention to the financial flexibility.There are few literatures on the effect of financial flexibility on inefficient investment in china.This paper is expected to have practical significance for the future development of China's enterprises.This paper selects the listed companies of Shenzhen stock exchange and Shanghai stock exchange in 2013-2015 as samples.Firstly,the Richardson model is used to measure the efficiency of investment.Then the model is constructed to verify the relationship between financial flexibility and underinvestment,and the relationship between financial flexibility and overinvestment.Finally,take the growth rate of GDP and the herfindahl-hirschman index as variables into consideration to further explore the speed of economic development in different regions and different competition under flexible financial influence on inefficient investment difference.The main conclusions of this paper are as follows:(1)Although there are many problems in China's enterprises,such as lack of investment and over investment,the degree of underinvestment and overinvestment are decreasing year by year.It shows that Chinese enterprises have begun to realize the problem of inefficient investment,which has changed in investment.This is a good start for Chinese enterprises to pay attention to the efficiency of investment.(2)Enterprises have a basic awareness of the use of financial flexibility,but it is not enough.There is still much room for improvement in financial flexibility.(3)There is a significant negative correlation between financial flexibility and underinvestment;Relative to the rapid economic development of enterprises,the slow regional economic development of the financial flexibility of enterprises to ease the role of investment is greater;Relative to the low level of competition in the industry,the financial flexibility of enterprises with high degree of industry competition is more effective for the underinvestment.(4)Financial flexibility is positively correlated with overinvestment;Relative to the slow regional economic development of enterprises,the financial flexibility of enterprises with rapid regional economic development has a greater effect on overinvestment;Relative to the low level of competition in the industry,the financial flexibility of enterprises with high degree of industry competition has a greater effect on overinvestment.