The Trends and Gaps in the Sensitivity of Investment to Cash Flow: Evidence from China

Round 1

Reviewer 1 Report

It is an interesting paper. The authors aim to analyze the sensitivity of investments to cash flow using a series of financial data provided by listed Chinese companies in the period 1998-2020.

Some suggestions to consider when reviewing this paper:

·        - The summary should include the current context of the Chinese market funding, the purpose of the research, a brief description of the methods applied, a summary of the main findings and contributions to the business environment.

·        - The purpose and objectives of the research / study should be included before the submission of contributions

·        - Where was the sample of 2,415 listed Chinese companies extracted from (19,864 observations per company year in total)? What source / method did you use?

·           -  What method did you use to divide the sample according to five measures of financial constraints (size of firms, payment of cash dividends, equity, HP index and WW index)? Why were these aspects not included in the research methodology?

·              -   "Empirical results show that the sensitivity of investments to cash flow has decreased throughout the sample period" Why are the results of your study presented in the "Introduction"?

·     - Many elements of the introduction are similarly reproduced in the conclusions.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

Dear Authors,

The paper is very interesting, but I highlight some considerations:

1. When referencing, the year of publication of the paper should be displayed along with the name. For example, Fazzari et al. (1998).

2. I understand that China employs IFRS, and there is no significant difference from GAAP in the United States in terms of cash flow. Formula (8) of this study explained that it was modified due to the difference in accounting standards between China and the United States. I think it is necessary to further explain whether there is actually such a difference.

3. In addition, it is necessary to verify what results appear when analyzing the Chinese market using the original formula (7) rather than the modified formula (8).

4. I felt that the English expression of this paper was somewhat awkward. I highly recommend that you be reviewed by Language Editing Services in MDPI.

Comments for author File: Comments.pdf

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 3 Report

Interesting! Seems like a new thread and new findings, based on my awareness of these topics. The one big objection, in terms of content, is that this journal's focus is on sustainability (environmental, societal, etc.) - and the readership may not understand how this article fits with that definition of sustainability.

I propose that the solution to this problem is simple. Frame the paper (with an additional sentence or 2 near the start and/or end) so that it relates to sustainability as the readership understands the term. For example, a sentence and a reference that could be added in the literature review - maybe at line 39 after footnote 9: "The connection between various measures of financial performance and firm value and environmental management have been explored in the context of China." Wei, L., Wenjun, W., Sulkowski, A. J., & Wu, J. (2011). The relationships between environmental management, firm value and other firm attributes: Evidence from Chinese manufacturing industry. Int. J. Environ. Sustain. Dev, 10, 78-95.

Alternatively, this sentence and citation could fit-in well between lines 81 and 113. 

Please double-check the text for minor improvements - like this section in the conclusion - the word "the" is used 2 more times than needed (these 2 bolded instances of "the" can be cut) - at lines 794-796:

The empirical findings have two implications. 794 First, for corporate finance, the diminishing the sensitivity of investment to cash flow sug- 795 gests that the role of the sensitivity as a proxy for financing constraints is diminishing and 796 that the gaps in the sensitivity can be used as a measure of financial market integration ...

Otherwise, an interesting and well-written article.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

No comments