Evaluation on Operational Cash Flow at Risk for China’s Real Estate Listed Companies in the Event Window of Financial Crisis

Abstract

The operational cash flow at risk (CFaR) of China’s real estate listed companies in this paper is considered in the event window of financial crisis that is the second half of 2008, this cash flow is a reality index, which discloses debt-paying ability and cash-making ability and explains the condition of no-financial enterprises in terms of cash. That means operational cash flow can increase the ability of resistance on risk and be critical to operation and development of the real estate listed companies and determines the effect of risk management particularly during the financial crisis. Then we study the cross-section data and panel data, compare the changes of the data is compared for giving evidence of risk management and simulate the operational cash flow in order to evaluate the financial control status for China’s real estate listed companies and give prediction when facing financial crisis. Monte Carlo simulation method is used in order to present two types of empirical fitting analysis with the actual data. After fitting operational Net Cash Flow (NFC) and Cash Flow of Asset (CFoA) of listed real estate companies, we get operational CFaR by A-D test,χ 2 test and F test for the good fitness with curve-fitting method in practice. We analyze data for trends and seasonal variations, the empirical results show that operational cash flow has been affected in financial crisis. However, China’s real estate listed companies operating cash flows at risk have been controlled effectively as a result of China’s timely and effective macroeconomic policy and measures.