Financing Constraints,Investment Cash Flow Sensitivity And Total Factor Productivity Loss

Numerous studies have shown that financing constraints can lead to large losses in Chinese total factor productivity(TFP).The explanation for this loss is that Chinese imperfect capital market has caused distortions in capital allocation.Private companies are more productive than state-owned enterprises,but they are more dependent on internal financing.Financing constraints are indicators that how difficult a company when external financing,a certain degree of financing constraints can lead to capital misallocation and loss of total factor productivity(TFP).Hsieh and Klenow(2009)researched Chinese misallocation in resource utilization and pointed out that if China can achieve the efficiency of US resource allocation,it will increase GDP growth by 25% to 40%.Since the publication of HK model,the decline in total factor productivity caused by resource misallocation has become the focus of theoretical research.Therefore,it is particularly important to measure the extent of damage caused by financing constraints to TFP.In addition,due to the positive relationship between financing constraints and investment cash flow sensitivity(FHP,1988)(But other scholars have objections to this proportional relationship(KZ,1997)).On this basis,this paper introduces investment cash flow sensitivity.Firstly,it measures the degree of financing constraints of listed companies in China;Secondly,verifies the relationship between investment cash flow sensitivity and financing constraints;Finally,based on the conclusions of the above two steps,the investment cash flow sensitivity is used to measure the financing constraints.The extent of Chinese total factor productivity loss provides policy advice for investment and financing activities in Chinese capital markets.According to this,we use two methods of theoretical analysis and empirical research.Firstly,we research on related theories;Secondly,taking the 2006-2017Shanghai-Shenzhen A-share listed company as a research sample.The sample data is divided into sub-samples according to age,scale and ownership type.Used the logistic binary model to calculate the financing constraint equations of Chinese listed companies for the sub-sample data of the ownership group,the scale group and the age group.In order to calculate the degree of financing constraint θ received by each enterprise;Thirdly,by constructing a generalized moment estimation model(GMM)to regress the sample data,verifying the significant sensitivity between the investment and cash flow of each enterprise,and obtaining the investment cash flow sensitivity coefficient,determining the investment cash flow sensitivity and financing,and determining the significant proportional relationship between investment cash flow sensitivity and financing constraints,in line with the research foundation of FHP(1988)(When the enterprise is subject to higher external financing constraints,the investment is more dependent on internal cash flow.Therefore,the sensitivity effect of corporate investment and internal cash flow can be used as a criterion for judging whether the enterprise is subject to financing constraints);Finally,based on the above conclusions,a theoretical framework is provided to directly link the investment cash flow sensitivity with the total factor productivity,and the total factor productivity loss of the full sample data is calculated by the empirically measured investment cash flow sensitivity coefficient.The final calculation result is about 4.45%.According to this method,the total factor productivity(TFP)loss of each subsample is calculated.According to this method,the total factor productivity(TFP)loss of each subsample is calculated.The results show that the state-owned enterprises,enterprises with large or large scales are less constrained by financing,and thus the degree of loss of production efficiency is relatively low.