International oil price uncertainty, financial constraints and corporate cash-cash flow sensitivity: Evidence from China
Chinese Economics Society Australia
School of Business and Law
Using investment-cash flow sensitivity test model, we investigate the impact of international oil price uncertainty on corporate financing constraints in China’s emerging and transition economy. We further examine whether state ownership affects the relationship between oil price uncertainty and corporate financing constraints. Consistent with the theoretical prediction, the main finding is that oil price uncertainty exerts a positive impact on corporate investment-cash flow sensitivity. In addition, compared with state-owned listed companies, the positive influence of oil price uncertainty on corporate investment is more significant for non-state-owned listed companies. Our further analysis, using the market-oriented reform of refined oil pricing in 2008 as a quasi-natural event, shows the variation between the low-degree marketization period and the high-degree one in terms of the relationship between international oil price uncertainty, state ownership and corporate investment-cash flow sensitivity.