Financial Constraints To The Investment Of Chinese Listed Firms Across Firm Characteristics

This paper uses a panel of 815 Chinese listed firms from the period of 1998 to 2004 to study how the investment cash flow sensitivity differs across firms with and without state ownership, and firms in different geographical locations. The authors' results suggest that the dependency of investment on cash flow is weaker for state controlled firms, than non-state firms. Firms in eastern and central China are subject to significant and stronger financial constraints than firms in western China, which may be closely related to China's regional development policies.