In the process of economic growth of China mode, the government acted as an invisibility driving force which has increasingly attracted attention from all walks of life. The quality of government is decided by the institutional arrangements announced by governments, meanwhile the behavior of enterprises is a reaction to the governmental institutions. This paper examines the internal factors of government quality, marketerization degree and cash cash flow sensitivity by the information of Chinese public companies during 2009—2011. The empirical results show that with the improvement of government quality, the enterprises take a tendency of using cash flow to save account and weaken the cash cash flow sensitivity. Meanwhile such changes exhibit different characteristics in the different market based degree area. Specifically, the cash cash flow sensitivity of higher market based enterprises diminishes significantly during the improvement of government quality, whereas it doesnt diminish significantly for lower market based enterprises. This paper provided some experimental evidence to explain the micro mechanism of local government refinements to optimize the general economic environment.