The Research On Working Capital Smooth Capital Investment

Along with our economy into the New Normal,"Steady Progress" has become the overall tone of China’s macroeconomic development.As for enterprise,firm value mainly depends on investment while the investment stability mainly depends on the smooth of the capital investment.Dues to the level of financial development and property rights,firms are now facing varying degrees of financial constraints.However,the working capital of the company has the characteristics of lower adjustment costs and stronger liquidity.In addition to exerting the "Directional Sign" in daily operation and management,it is more capable of smoothing the strong fluctuations in cash flow and promoting investment in the reality of financing difficulties,so as to promote the smooth and steady investment.Based on the special institutional background of our country and the macroeconomic environment of the current capital market,this thesis starts from the management of working capital and studies its role in maintaining the stability of the company’s investment.In view of the perspective of financial constraints,the thesis examines the effect of working capital smoothening capital investment and further analyzes the effect differences under different property rights.The conclusion of the thesis shows that working capital can smooth the capital investment,which can absorb the unfavorable fluctuation of the cash flow during the investment process.The degree of financial constraints is closely related to the smoothing effect between working capital and capital investment.With the increase of the financial constraints,the working capital smoothing effect strengthens capital investment.Further study found that,compared with the state-owned enterprises,non-state-owned enterprises should take more smooth capital investment through the working capital so as to reduce the unfavorable impact of cash flow.Scientifically investment decision is related to the growth and future of the enterprise.It is helpful to deeply explore the multiple roles of working capital management by systematically analyzing the relationship between capital investment and working capital management,and confirming the importance of working capital management on suppressing equity type investment fluctuation which may provide a new path.Based on the perspective of financial constraints and considering the differences among the property rights,it provides firm-level empirical evidence for private-owned enterprises that facing strong financial constraints need to maintain cash flow stability during the investment process and ultimately to promote the long-term development of the enterprises.The thesis is divided into seven parts:The first part is the introduction.This part mainly introduces the research background of this thesis,and puts forward the research topic and discusses its theoretical significance and practical value.Then it defines the main concepts,the research methods,the frame ideas of the thesis,and also explains the innovation.The second part is literature review.This part is based on the theory of financial constraints,working capital management and other literature related to investment.The third part is theoretical analysis and research hypothesis.Under the support of information asymmetry theory,principal-agent theory and pecking order theory,this thesis puts forward the hypothesis which referring to the internal mechanism among the smoothing of working capital on capital investment,the degree of financial constraints.The fourth part is the research design.This part mainly introduces the source of the data and the selecting process.Establishing the research model and defining the research variables that lays the foundation for the next empirical research.The fifth part is the empirical test and analysis.The thesis uses dynamic panel data to analyze descriptive analysis and correlation analysis,and then uses the system GMM method to test and analyze the research hypotheses.The sixth part is for further analysis and robustness test.On the basis of the main research,this thesis further analyzes the differences of the nature of the property rights,puts forward the hypothesis of research,and conducts a robust test of the full text after descriptive analysis and regression test.The last part is the conclusion,shortcoming and the prospect.After summarizing the conclusion and analyzing the shortcoming,the thesis puts forward the prospect and policy suggestion for relevant research.