Financial Crisis, Control Rights And Cash Flow Of Investment Sensitivity: The Chinese Perspective
The investment cash flow sensitivity is considered with firm's control right and the impact of financial crisis at the end of 2008. Compared with the classic model by ownership, the model with control rights is more efficient and stable. The empirical study also shows the change in model structure before and after the financial crisis. Considering this change, firm-level CFS is estimated based on ownership and control right respectively. The result implies that manufacturing firm conclusion is extendable only when the model is based on control rights. The difference between Chinese companies and US companies is, there are massive negative cash flow sensitive companies in China, while positive sensitive companies are a great part of the companies in US.