| The outbreak of Corona Virus Disease in early 2020 unleashed a devastating blow to China's manufacturing industry,disrupting supply chains,and choking off demand.How to support and stimulate the economic recovery to resist the market downturn and reduce the market fluctuation has become the focus of attention of all walks of life and seems to weaken the urgency and necessity of further implementation of supply-side structural reform.However,since the accumulated debt risks in non-financial corporate sectors before outbreak of the epidemic have not been effectively released,under the inclusive policies stimulating economic resurgence,the leverage ratio in non-financial corporate sectors climbed to 161.1%by the end of the first quarter of 2020,recording the highest level since the 2008 financial crisis.At the same time,according to the data from National Bureau of Statistics,the severe contraction of domestic and foreign demand has led to negative growth in fixed asset investment and rapid ramp-up in debt scale in the first three quarters of 2020 in China's manufacturing industry.In face of the impact of negative demand,the increasingly greater risk of debt default is mainly attributable to declines in investment,output and income.In the first half of 2020,the number of industrial enterprises undergoing losses increased by 33.83%year-on-year,with the amount of losses increasing by28.91%year-on-year,and the balance of matured default bonds in the Chinese bond market reached RMB55.496 billion.The manufacturing industry is the cornerstone of a country's national economy.In the current critical period for quickly converting old economic drivers of Chinese economy into new ones,rational allocation of enterprise assets and capital structure not only establishes a way to eliminate the adverse effects of negative market impacts but also gives strong support for the healthy development of the manufacturing industry.The idea of“letting the market play a decisive role in resource allocation and the government play its role better”proposed at the 18th CPC Central Committee offers a new way for regulating leverage and capacity-related issues.How to let the market play a decisive role in asset allocation and debt financing,and let the supply-side structure reform policies and measures deployed by the government play a positive role on the premise of respecting and adapting to market rules?To answer this question,an in-depth and comprehensive analysis must be first made on the market rules governing asset allocation and debt burden behaviors in the manufacturing industry based on the development characteristics of Chinese economy.Therefore,under the current economic background,it is a vital topic on how to seek for post-epidemic supply-side structural reform,especially for new perspectives about the“deleveraging”policy,by aligning with the market function mechanism and rules in all aspects,to harmonize and facilitate supply-side structural reforms and economic recovery.Based on China's present national and economic conditions,this paper use micro large sample data of listed manufacturing enterprises to explore the market mechanism of asset allocation and debt financing behaviors.First of all,this paper analyzes the impact of asset allocation on debt financing under the market mechanism and explores the forming mechanism of the U-shaped relationship between market demand and debt financing.Secondly,based on listed manufacturing enterprises'financial data,this paper demonstrates the non-linear and asymmetric characteristics of the market allocation mechanism governing corporate debt financing behavior.Thirdly,considering that China's economic situation and market environment have undergone significant changes after the entry of the new normal,this paper further empirically testes the impact of the positive and negative demand shocks of different durations on debt financing behavior.Fourthly,considering that corporates'debt financing behavior are usually adjusted by enterprises in their asset allocation activities,this paper introduces demand shock,asset allocation and debt financing behavior into a unified research framework,after decomposing asset allocation into investment behavior reflecting asset size adjustment and capacity utilization behavior reflecting asset utilization,we empirically test the impact of investment and capacity utilization adjustment on debt financing behavior under the market mechanism.Finally,in accordance with market rules to explore fiscal policy choice as a starting point,empirically tests the impact of different fiscal expenditure policy on the interest-bearing debt ratio and asset turnover ratio of the corporate under different demand shocks,and then analyzes the impact of asset turnover on interest-bearing liability ratio under the different fiscal policy.Key scope of the study and related conclusions in this paper are as follows:Firstly,combined with the characteristics of China's"large market",the market demand factors affecting asset allocation and debt financing are analyzed first.Then,the influence of asset allocation adjustment on debt financing behavior under the action of market mechanism is analyzed theoretically,including the microcosmic mechanism of asset over-entry and excess asset formation and that of asset allocation adjustment on debt financing entry and repayment under market mechanism.Based on the theoretical analysis,it is found that,on the one hand,in the stage of rapid expansion of market demand,the irrational expectation deviation of decision-makers and the consistent optimistic expectation under the condition of incomplete information have produced a strong induction on the entry of assets.Under the incentive of tax-saving income and investment income effect,the corporate debt scale expands significantly.On the other hand,in the stage of market demand contraction,investment irreversibility and asset specificity hinder the withdrawal of excess assets,and the decline in investment and capacity utilization leads to a rapid decline in income effects,which inhibits the withdrawal of stock debt and may lead to a rise in default losses.As a result,there is a significant U-shaped relationship between market demand and debt financing,which stems from the differential influence mechanism of asset allocation adjustment on enterprise debt financing behavior under the market allocation mechanism.It is manifested in the promotion of debt financing entry and the inhibition of exit.Secondly,according to the annual report data of manufacturing listed companies from 2004to 2019,this paper constructs the agent index to reflect the demand impact and further identifies the severe positive demand impact,mild positive demand impact and negative demand impact based on the business performance index.The results show that there is a significant U-shaped relationship between demand impact and manufacturing asset-liability ratio,while the relationship between demand impact and manufacturing net new debt ratio is positive.It can be inferred that the rise of asset-liability ratio under negative demand impact stems from the difficulty to pay off debt.Comparing and analyzing the changing trend between new investment and capacity utilization ratio and debt financing behavior under different demand shocks,it is found that investment and debt rise synchronously under severe positive demand impact,while the change is reverse under negative demand impact,showing that there may be a nonlinear relationship between new investment and debt level under the impact of demand.Under the impact of positive demand,the efficiency of capacity utilization is higher but the ratio of assets and liabilities is lower.However,under the impact of negative demand,the utilization ratio of production capacity decreases and the ratio of assets and liabilities increase significantly,indicating a negative relationship between them.Thirdly,based on the special economic development background of China,this paper makes a theoretical analysis of the market mechanism of manufacturing debt financing behavior and puts forward the hypothesis that can be tested.Using the large sample annual report data of listed companies in China's manufacturing industry,this paper designs the proxy index reflecting demand,price and demand impact and establishes the two equations reflecting the total amount of enterprise liabilities and the level of incremental liabilities.Moreover,the effects of demand and price signals on the debt financing behavior of enterprises under different demand impacts are tested empirically.It is found that under the severe positive demand impact,the positive demand and price signals form a strong induction to the"entry"of enterprise debt financing,and the scale of enterprise debt rises significantly.Nevertheless,under the negative demand impact,the negative market signal causes difficulty for the enterprise to pay off stock debt.The effect of market mechanism on debt entry and exit shows significant asymmetry and nonlinearity.Fourthly,considering the increasing downward pressure of the global economy and the fact that the market demand at home and abroad continues to be depressed,this paper further empirically tests the impact of positive and negative demand on corporate debt financing behavior in different durations.It is revealed that in the short term,negative demand impact will not significantly change the debt level of enterprises,but with the increase of its duration,the debt level of enterprises will rise significantly.After further decomposing the enterprise liabilities into operating liabilities and financing liabilities,it is observed that under the impact of short-term negative demand,the enterprise will increase the interest-bearing debt ratio and reduce the operating debt ratio because the debt capacity of the enterprise has not changed significantly.However,with the increase of negative demand duration,the debt capacity decreases significantly,which leads to the"substitution effect"of operating liabilities on financing liabilities.Fifthly,from the overall strategic perspective of enterprises,this paper studies the mechanism of new fixed assets investment and capacity utilization efficiency on enterprise debt financing under different demand impacts,so as to reveal the micro behavior motivation behind the U-shaped relationship between demand impact and debt level.The empirical results manifest that under the impact of severe positive demand,the increase of new investment can significantly induce and promote the debt of enterprises.In contrast,under the impact of mild positive demand,the promotion of new investment on debt level weakens,which further strengthens the motivation of some enterprises to reduce debt.Additionally,impacted by negative demand,the decrease of investment expenditure and capacity utilization efficiency has an obvious inhibitory effect on the repayment of liabilities.Under the market mechanism,the effectiveness of the inducement effect from increased investment on the"entry"of debt funds,and the inhibition of the"exit"of debt due to the decline of income effect caused by the decline of investment and capacity utilization,are the fundamental reasons for the U-shaped relationship between demand impact and debt level.Sixthly,considering the influence of market mechanism and government policy on enterprise debt,this paper empirically tests the influence of investment constructive fiscal expenditure and indemnificatory fiscal expenditure on enterprise debt under different demand impacts.First of all,after the micro decomposition of the macro leverage ratio,it is found that the interest-bearing debt ratio and asset turnover rate of micro-enterprises are important factors affecting the macro leverage ratio.After the analysis of empirical facts,one can see that under the background of small changes of debt ratio of micro-enterprises,the sharp decline of enterprise asset turnover rate may be the main reason for the increase of macro leverage ratio.Given this,this paper examines the impact of different fiscal policies on the interest-bearing debt ratio and asset turnover rate of enterprises under the impact of demand,and on this basis tests the impact of asset turnover rate on interest-bearing debt ratio under different fiscal policies.The empirical results reveal that expanding investment constructive expenditure can not only optimise the allocation of enterprise assets but also push up the leverage ratio of the enterprise sector.The expansion of affordable expenditure is conducive to improving asset turnover,thereby inhibiting the rise in the interest-bearing debt ratio.Hence,in the period of demand contraction,increasing affordable expenditure can not only stimulate consumption,promote economic growth,but also restrain the increase of enterprise debt ratio due to the quality of enterprise assets. |
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