I examine the firms with different hedging needs in their investment and financing strategy during the financial crisis in 2008. I define the hedging needs using the correlation between their cash flow and the industry Q. The firms with positive correlation between the cash flow and industry Q are defined as low hedging needs firms and the firms with negative correlation between the cash flow and industry Q are defined as high hedging needs firms. The low hedging needs firms have similar investment growth as high hedging needs firms before the crisis but significantly less investment growth during the crisis. However, the impact of financial crisis on firms with low hedging needs is smaller. Those firms efficiently respond to the decline of investment opportunity during crisis period by cutting capital expenditures since the capital expenditure in crisis are associated with lower profitability. And the empirical results support that there is a mix of supply shock and demand shock during financial crisis in 2008. / Tao, Xiaojue. / Thesis M.Phil. Chinese University of Hong Kong 2015. / Includes bibliographical references (leaves 22-24). / Title from PDF title page (viewed on 11, October, 2016). / Tao, Xiaojue.