| As an important and widely existed organizational form in China,enterprise groups play a piv-otal role in the development of China's capital market.Within the enterprise group,the capital allo-cation between member companies forms the internal capital market of the enterprise group(Wei and Wan,2006).At present,most scholars have agreed that the internal capital market has the function of easing financing constraints(Wang et al.,2011)and some scholars have further found that the internal capital market of the enterprise groups ean promote corporate innovation.But at the same time,few research gives a direct test on how the internal capital market of enterprise groups easing the corporate financing constraints and promote innovation.Just as Wang et al.(2011)point out that the ICM itself cannot directly affect the value of the enterprise,and it should be the operation and mechanism of the ICM,such as related transactions,capital allocation,mutual guarantees etc.,play-ing the role.Therefore,in this paper ? try to give some direct analysis and test of how the internal capital market of enterprise groups affecting corporate financing constraints and innovation.The Group Finance Company in China give me a perspective for analyzing the above mecha-nisms.On the one hand,the Group Finance Company has become the main operation platform of the intermal capital market(ICM)in many enterprise groups in China(Wang et al.,2011);on the other hand,the disclosure of the related transactions between the Group Finance Company and the member listed company give me the opportunity to clearly divided the way in which the Group Finance Com-pany influence the member listed company with financing constraints and innovation.Meanwhile,as a non-banking financial institution with Chinese characteristies,Chinese scholars conducted a pre-liminary research about the economic consequences of the Group Finance Company.Among them,Wu and Huang(2016,2017b)provided the evidence that the Group Finance Company has the effect of alleviating corporate financing constraints as same as the other ICM;Wang et al.(2016)prove that the Group Finance Company can improve the innovation of the list company.But these research have not consider the transaction between the Finance Company and the member list company,so have some limit.As for the Finance Company and the list company,the major related transactions are deposits and credits.So,given the possible of agency problems associated with deposit transac-tions(Dou and Lu,2016,2017),and the Group Finance Company credit business can alleviating the financial pressure of member companies(Chen,2013),we further use the credits transactions to analysis the question:(1)Is the credit transactions of the Group Finance Company influence the member list company with its loan amount and the loan cost?(2)If the credit transactions of the Group Finance Company bring some convenient with debt finance and lower debt cost,is it have some effect and how it effect on the innovation of member list company?Based on institutional analysis,literature review,and theoretical derivation,I used the data of Chinese listed companies from 2007-2016(except financial industry company)and the data of transaction and relationship between the Group Finance Company and member listed com-pany.Also,we carries out some tests,including company fixed effect,grouping variable analysis,parallel trend analysis,propensity score matching,etc.,as much as possible to eliminate the endogenous problems.I find that,(1)Firstly,The credit transactions of the Group Finance Com-pany gives member listed company some convenience to borrow debt,which is reflected in its short-term credit loans expansion.Secondly,the credit transactions reversely reduce the cost of borrowing.Thirdly,due to the convenience and low cost,the credit transactions increase the total loans of member listed company,which is mainly by increasing its short-term loans.Fourthly,from the perspective of cash flow,I also find that the credit transactions increased the cash inflow of corporate loans and reduced the cash demand of the company for issuing bonds.Further test shows that the credit transaction is complementary to the bank loan and can mitigat-ing the financing constraints by easing up the cash-cash flow sensitivity,Promoting the financing in the credit crunch environment and helping adjustment under capital structure deviation.(2)Due to the convenience and low cost,the credit transactions of the Group Finance Company promote material innovation of the member listed company,which is mainly by increasing in-vention applications and utility applications.I also find that,the credit transactions increase the current liability and then the current liabilities influence the innovation.Further test show that the effect of the Group Finance Company credit on innovation is significant in the company with finance constraints,significant in the credit crunch environment and also in the company with its target capital structure bigger than the real structure in the beginning of the year.Lastly,through the analysis of the patent authorization,I find that the credit transaction promotes the effective output of innovation.This paper contributes to the literatures that investigate ICM(or the Group Finance Company)and the literatures of debt financing and innovation.(1)Firstly,this paper provides a direct empirical evidence by analyzing how the credit transaction of the Group Finance Company influence the loan amount,the cost of member listed company,the corporate financing constrain and innovation.(2)Secondly,this paper hand-collect the data of the Group Finance Company's transactions with the member listed company,and compares three relationship between them.I find that the impact of the Group Finance Company on the debt financing of the listed company mainly comes from whether the credit transaction occurs,rather than other related transactions or belong to a same group.Fur-thermore,this paper is different with other research on the sample and research method.There are also some limitations in this paper.For example,due to insufficient data,it is impos-sible for me to analyze the amount of loan that the Group Finance Company help to finance through consultation.It is impossible to calculate and judge the operating efficiency and effectiveness of each Group Finance Company,and compare the low-efficiency and high-efficiency effect on debt financ-ing and innovation.Finally,because of the time,data,ability etc.the above limitations and shortcom-ings are the direction for further improvement in the future research. |
PDF Full Text Request