Guarantee Network And Firm Behaviour: Research On Mechanisms And Economic Consequences

Lacking of formal system,firms tend to establish social network to acquire resources.Among all types of resources,credit resources are particularly important for firms' operation and development.If the firm does not have enough collateral,it can get loans through social network and its financial constrain will be eased.Therefore,theoretically,the guarantee network can improve firms' asscee to credit resources snd solve firms' financing problem.However,there are contradictions between theoretically studies and actual conditions.On one hand,guarantee network has resulted in some problems.On the other hand,some studies indicate that the guarantee network may serve as a channel of tunneling,which implies that the guarantee network will destroy firm value and performance.The guarantee network is relatively common in China.If the guarantee network just has disadvantage,why would firms join the guarantee network? However such questions are not fully explored in previous studies.This paper empirically investigates the economic consequences of guarantee network using listed firms' guarantee network from 2003 to 2015.Chapter one introduces the research questions and methods of this paper.Chapter two introduces the background.Chapter four surveys previous researches on underlying guarantee,third-part guarantee,social network and credit guarantee network.Chapter four begins with the empirical research.Sample of guarantee comes from Wind database.With the method of hand-collect,we get the related variables of guarantee network.This paper studies the economic consequences of guarantee network in several respects,including risk-taking,innovation and earnings management.In chapter five,we discuss the relationship between the guarantee network and firms' innovation.The results suggest that the guarantee network can increase firms' innovation output.At the same time,the relationship between the guarantee network and innovation is influenced by economic policy uncertainty.When economic policy uncertainty is higher,the positive effect of the guarantee network on innovation is more significant.Further studies show that both financing mechanism and information mechanism are materialized in raising the level of innovation.However,only when the demand for the innovation is stronger,the guarantee network can have a significantly positive effect on firms' innovation decisions.Chapter five investigates the effect of the guarantee network on earnings management.The results suggest that the guarantee network can reduce the level of earnings management,including accrual earnings management and real earnings management.And such effect is affected by the level of financing constraint.The effect of the guarantee network is more significant in firms with lower degree of financial constraint.Further tests indicate that the guarantee network affects the earnings management through the information mechanism.At the same time,the guarantee network is a supplement for the existing governance mechanism.Only when the firms are lack of scrutiny from the audit and analyst,the guarantee network can reduce the real earnings management.Finally,we invest the relationship between guarantee network and risk-taking in chapter six.The results suggest that guarantee network can improve the level of risk-taking.And the effect of the guarantee network on the risk-taking is more pronounced for firms which acquire guarantee via guarantee network.The path analyses show that the guarantee network affects firms' risk-taking by influencing firms' loan.Moreover in non-state firms or non-political-connected firms,the effect of guarantee network on risk-taking is more significant.Collectively,this paper investigates the economic consequences of the guarantee network using the theory framework of social network.Therefore,we not only provide the theoritical evidence for the widespread existence of the guarantee network,but also provide implications for how to improve the financing capacity of firms,reduce the credit risk of banks and improve the efficiency of credit resources allocation.