Notice of RetractionThe Cash-Cash Flow Sensitivity of Chinese Firms - Findings Associated with Uncertainty and Financial Constraints

Nowadays financial risk is observably increasing in international finance market, and real economy is also involved. Uncertainty facing a firm increases the risk of operating, which raises the probability of liquidity shortage, and firms' financing ability is restrained by financial constraints. This paper argues that uncertainty plays an important role in cash policy; investigates the effect of financial constraints on cash-cash flow sensitivity under uncertainty; finds that the cash-cash flow sensitivity of financially constrained firms is significantly positive. However, the cash-cash flow sensitivity of financially unconstrained firms is not significant at all.