Financial Development, Legal Environment, Financial Background of Firms and Financing Constraints--Evidence from Chinese Private Listed Firms
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Abstract The market imperfections and the lack of institutions protecting investors’ interests will lead to constraint on firms’ external financing. The property attributes of Chinese private enterprises further constrain the financing of them. The author examines the influence of financial development, the development degree of legal system and the financial background of firms on the demand for liquidity by focusing on how these factors affect the sensitivity of firms’ cash holdings to their cash flows. Using Chinese private listed firms during 2002-2006 as samples, the author finds the sensitivity of cash holder to cash flows decreases with financial development and the development degree of legal system, but the above effect disappears when firms’ ultimate owners or directors hold the financial backgroundts.
BO Ke-Qi. Financial Development, Legal Environment, Financial Background of Firms and Financing Constraints--Evidence from Chinese Private Listed Firms. Economic Survey, 2011, 28(1): 068.
2011, Vol. 28 
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