Corporate growth, liquidity assets value and financing decision
Yaqin Lu1, Cunzhi Tian2, Yi Wu2
1Economic Research Institute, Yunnan University of Finance and Economics, 650221, Kunming, Yunnan, China
2Faculties of Management and Economics, Kunming University of Science and Technology, 650093, Kunming, Yunnan, China
Based on the external financing analysis framework under asymmetric information, this paper analyzes the influence of corporate growth on liquid assets value and financing decision. Both of the theory and numerical calculations show that liquid assets value would increase with the increasing in corporate growth. For the reinvestment decision in the case of higher reinvestment demand, if the price of liquidity assets is higher than value, it is optimal not to reinvest; if the price is lower than value, it is optimal to reinvest; if the price is equal to value, there is no difference found in reinvesting or not.