To maximize the profit rate of security portfolio and minimize the investment risk measured by β,diversification selection constraints can be used to counteract the non-system risk.

The results show that:(1) the degree of the financing constraints can not be mirrored by the investment-cash flow sensitivity in the listed firms,which disagrees with the opinions from some Chinese researchers in this field;(2) the sensitivity is positively correlated with the profit earning power but negatively with the repaying debt .

In this paper, the research results with regard to the existence and the originations of the investment cash flow sensitivity were reviewed basing on financing constraint theory of the asymmetric information and the agency costs hypothesis of the free cash flow.

Financial constraints hypothesis based on the cash flow sensitivity of cash Both is tested by some researchers, but their opinions are different each other.

Based on agency theory,the paper investigates the relationship between ownership structure and financial constraint level of listed companies in Chinese group corporation.

The auther analyzed financial constraints on China s business investment in industrial sector employing panel data GMM method.

In order to test the hypothesis carefully,the paper also studies different sub-sample in terms of financial constraints,growth opportunities,nature.

The financial market and the firm business investment are positively related, which is supported by both the Tobin Q theory and the financial constraints theory.