Divestiture, Managerial Ability and Corporate Financial Flexibility
Keywords:Divestment, Financial constraints, Financial flexibility, Managerial ability.
Divestment is an effective way to allocate resources in the capital market. In recent years, the frequency and scale of divestment of listed companies in China continue to increase. Based on A sample of A-share listed companies in Shanghai and Shenzhen from 2011 to 2020, this paper examines the relationship between divestment and corporate financial flexibility from the perspective of corporate governance, and examines the moderating effect of managerial ability on the relationship. The results show that divestment is significantly positively correlated with corporate financial flexibility, and the management ability can promote its positive effect. Further research finds that financial constraints play a significant intermediary role in the impact of divestment on financial flexibility, that is, divestment can promote the improvement of financial flexibility by alleviating financial constraints.
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