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A Review of China's listed companies on the proportion of debt financing

Author: ManXin From: www.yourpaper.net Posted: 2009-12-17 06:10:29 Read:
[Abstract] the ratio of debt financing has been our financial scholars continue to explore the problem, the authors will study literature at home and abroad on the basis of analysis, combined with the actual situation of China's listed companies in debt financing, and the study's data on the basis of, and draw some of the conclusions of the debt financing.
[Keywords] Review of the listed company debt financing

I. Introduction

The proportion of debt financing is The financial scholars continue to explore the problem. Modern corporate finance debt financing and equity financing in two ways. Enterprises selected based primarily on the size of the cost of debt financing and equity financing cost of debt financing or equity financing. So as to achieve the maximization of corporate value. Therefore, enterprises in order to achieve maximum market value, the need to determine an optimal capital structure. The only reasonable capital structure of debt financing to be able to debt capital institutions of the listed companies to get good results, the following specific analysis of listed companies at home and abroad in debt financing.

Second, at home and abroad on the debt financing of the literature review

Study corporate debt financing problems are mainly divided into three parts: The first part is based on the Durant as the representative of the early research, Durant (1952), concluding the traditional theory of capital structure, debt financing will inevitably cause financial some of the risks, such as dividend payments. The total risk of the enterprise will be increased with the increase in debt. Second part of the MM theory based on the modern capital structure theory, the capital structure of the modern capital structure theory in the research enterprise mainly consider two aspects of the tax and bankruptcy costs, corporate debt financing is divided into two main areas, one to on behalf of tax-poor school, Farah, Selwyn, Benin, Stiglitz, the main corporate income tax, personal income tax and capital gains tax on the difference in the tax rate on capital structure, as well as the progressive income tax system investors a different level of personal tax differences. Second, Burkett, Scott Warner, on behalf of the bankruptcy cost of school, research bankruptcy cost structure of corporate finance. The two schools last united in the trade-off theory, the theory that an optimal capital structure of the enterprise is the balance between tax revenue and the cost of bankruptcy. Representative of the theory the Dean Giraud, Masulisi,. In addition to the tax burden and bankruptcy costs, 70 generation has been started to notice there are other factors that affect the capital structure, the research in this area Burkett, Tabu, Cague. The third part of the late 1970s, the capital structure of the introduction of asymmetric information. The main research including Jensen and Meckling theory of agency costs, Roth, Leland and Pyle's signal - Incentive Model and Myers's pecking order theory. The pecking order theory of Myers (1983) pointed out that firms prefer internal financing, in the presence of external financing conditions, the companies will select those security price of bonds such liabilities. Then choose hybrid debt such as convertible bonds, equity financing will eventually choose.
Foreign financial scholars
Comments on the study of the proportion of debt financing
William R. Gebhardt; Charles MC Lee; Bhaskaran Swaminathan pointed out that some of the characteristics of the various risks and enterprises will affect the cost of financing, the authors selected 14 enterprises were classified into 5 groups, including market volatility, Leverage, liquidity, and information environment irregular, earnings volatility, and other pricing. Market volatility, including the beta of the market, leverage the two explanatory variables include D / B and D / M, the fluidity and information environment, including the scale, income volatility, including the revenue expected earnings per share, analysis of the expected amount of the other pricing irregular including long-term growth rate, B / M, such as some of the other indicators.
Sheridan Titman, Roberto Wessels (1988), in the study of the influencing factors of corporate capital structure, the first debt into long-term debt, short-term debt, convertible debt. That affect corporate capital structure, including the value of asset-backed, non-debt tax shields, growth, uniqueness, industry factors, scale, profitability. The value of asset-backed asset type will affect the choice of capital structure, primarily through the intangible assets / total assets (inventory fixed assets) / total assets of the two indicators measure. Non-debt tax shield is less due to the depreciation of the tax and investment tax incentives can be seen as an alternative to tax income generated by debt financing. Depreciation / total assets and investment tax incentives / total assets of the two indicators measure. The uniqueness of the liquidation, enterprise customers, suppliers, employees, the potential impact of the cost of corporate capital structure decisions. Enterprise customers, suppliers, employees, produce a unique product, there may be a higher cost of the settlement. Their employees and suppliers may have a unique set of skills and capital, their customers may find such a unique product or service is difficult to find alternatives. Measurable indicators: cost of sales / sales, turnover rate. The end of the article concluded that the unique nature of the enterprise is in liquidation at a high cost to customers, suppliers, employees, and therefore will require a relatively low debt ratio. The company's future growth, the value of asset-backed, non-debt tax shield on the debt ratio is not great. Our financial scholars
Comments on the study of the proportion of debt financing
Lu Zhengfei, Xin Yu (1998) study using descriptive statistical methods that different capital structure of the industry, there are significant differences in the factors affecting capital structure. Profitability significant impact on the capital structure, the scale, the value of asset-backed, and growth factors on the capital structure is not significantly in terms of machinery and transport equipment industries, using multiple regression method. Yekang Tao, Lu Zhengfei (2004) study the cost of equity financing influencing factors come stock coefficient is the main determinant of the cost of equity, debt ratio, scale, B / M is also an important factor in the impact of industry factors still exist on financing costs significant indicators of the impact of business risk, information asymmetry and agency costs are not important factors affect the cost of corporate equity. Hong Xixi Shen Yi-feng (2000) study of factors affecting capital structure, 95-97 221 industrial companies of the Shanghai Stock Exchange for the sample data, and finally concluded: firm size and profitability have a significant impact on the choice of capital structure corporate interests, growth and industry factors on capital structure is not significantly affected. Of Shinong Wu et al (2002) In conclusion, the research at home and abroad, add a corporate governance structure of the factors affecting capital structure to generate internal resources (cash flow), the costs of financial distress, and other factors. In addition, the explanatory variables are no longer simple level of total liabilities, and add to the long-term debt ratio and current liabilities ratio of two explanatory variables. Wang Yurong (2005), the use of the financing structure determinants theoretical framework for the study of all A-shares in Shanghai and Shenzhen stock exchanges of non-financial listed companies, asset-liability ratio and profitability, non-debt tax shield income volatility was negatively related; with the size of the company, the growth, the ratio of tangible assets, the ratio of non-tradable shares were positively correlated. Domestic scholars, I think, there is an implied assumption Lu Zhengfei, Shen Yi-feng, et al: All debt is homogeneous. And did not notice the impact of the capital structure of the ratio of long-term debt and short-term debt ratio.

Third, the proportion of debt financing data research conclusions are summarized

Above, we specifically analyzed the theoretical results of debt financing in the capital markets at home and abroad, through data analysis, we found that the debt financing of listed companies in China by the scale of the value of asset-backed, profitability, growth, liquidity, market risk, the proportion of state-owned shares the eight factors of the non-debt tax shield by collecting the data of the debt financing of some of the listed companies in China, and thus these eight factors were analyzed, and finally come to the following eight main conclusions:
Balance and scale, the value of asset-backed growth, the proportion of state-owned shares was positively correlated with profitability, liquidity, market risk, non-debt tax shield was negatively correlated. Which the contribution of the growth of the asset-liability ratio is not very strong.
2. Relative to short-term debt ratio study found that long-term debt ratio by the scale, the value of asset-backed, growth, profitability, liquidity, market risk, the ratio of state-owned shares, non-debt tax shield on long-term liabilities The impact is not big.
3. Relative to the rate of long-term liabilities, the study found that the ratio of short-term debt by the scale, profitability, liquidity, market risk, non-debt tax shield impact the value of asset-backed, the ratio of state-owned shares and growth sexual contribution of short-term debt ratio is not large.
4. Discovered through the study of all A-share listed companies, and did not take into account the impact of industry factors on the structure of corporate debt financing In addition, throughout the course of the study, in order to facilitate the collection of data, we are only concerned with the internal factors affecting corporate finance ignore the contribution of external factors on the company's debt financing. In fact, this part of the impact of corporate debt financing include: management background (knowledge, work experience, stake), the company research company background on the company's debt financing is only concerned about the ratio of state-owned shares of the debt financing government departments relations.
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