Abstract
This paper focuses on the relationship between financial constraints, corporate governance and investment efficiency in China over the 2007-2011 period. In order to identify the existence of financial constraints, we grouped these companies according to their size, dividend payout and the KZ index. A model was estimated: financial constraints index model to examine the effect of investment efficiency on firms' financial constraints and to estimate the sensitivity of investments to cash flow. The study confirms that the financial constraints are positively and significantly associated with the sensitivity of investment to cash flow. We found that corporate governance and ownership have significant effects on firms' investment decisions. The results suggest that information asymmetry theory cannot fully explain the financial constraints and investment cash flow sensitivity in our country, so the corporate governance is an important determinant in explaining them.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
