The Analysis On The Relationship Between Debt Financing And The Corporate Performance Of Listed Companies In Manufacturing Industry

The research on corporate capital structure has become one of the hottest issues in the financing field. Especially since the 70s of the 20th century, the introduction of capital structure theory such as agency costs, asymmetric information theory develops a more extensive area. It is not only the enterprise's financial objectives, financing, financing costs, impact on corporate financial issues, but also corporate governance, incentive structures have a greater impact. China capital market is becoming mature, especially the stock market in a highly attention. In particular, China's listed companies tradable share reform and the adoption of non-tradable shares tradable, capital market has a new stage of development. However, debt financing as an important component of capital structure, corporate bond market is considered as China's capital market "short leg." Slow development of corporate debt financing issue will not only not conducive to the expansion of corporate self-financing channels and the sustainable development of Chinese enterprises, but also affect the overall financial system and restrict the financing of capital market efficiency. There is insufficient appreciation of the importance of debt financing, people do not concern the role of debt financing, ignore the interests of creditors and debt financing of corporate governance effects. Therefore, It is very important for the development of corporate governance structure and corporate performance to research debt financing. In the present stage, equity financing has been increasing; debt financing has lagged far behind in equity financing. Compared to Western countries, the proportion of debt financing in China is relatively low in Western developed countries. This phenomenon, compared with the optimal financing order which is popular in international market, just the opposite. a lot of analysis was researched on whether foreign classical capital structure theory is valid in our market, different scholars have different conclusions and answers. Based on the relevant studies of predecessors at home and abroad, we focus on the debt financing which is one part in capital structure and analyze the relationship between debt financing and corporate performance of listed companies in manufacturing industry. This paper scientifically describes the issue with the method of theoretical analysis and empirical analysis, which based on the related theories. The subject is to reveal how much the Debt Financing contributing to the corporate performance, and also reflect the related problem of listed companies in Chinese stock market, which can do something for enhancing the corporate governance and corporate performance. This paper is divided into four parts. The first part is a brief introduction to this thesis; this part introduces the research background, meaning, writing ideas, research methods and the basic framework of the paper. The second part is the literature review, this paper summarizes the scholars of debt financing and corporate performance, further more, it describes the related research achievements. The third part is related to debt financing and corporate performance analysis and then puts forward two hypotheses on the basic of theoretical analysis. The fourth part is the empirical analysis; this article produces the selection of the sample, Variable and the establishment of the models, descriptive statistics and correlation coefficient analysis, and the results of the empirical analysis. In this paper, we collect the A share manufacturing listed companies as sample companies from 2004 to 2008, this essay chooses return on total assets (ROA),and return on equity (ROE) to measure the company performance,as well, asset-liability ratio to measure the debt level of listed companies. First, this article makes a descriptive analysis; Second, applied SPSS statistic instrument, correlation analysis and regression analysis are given to analyze the relationship between debt financing and company performance. Last, we get the results we need. The results indicate that Chinese listed companies asset-liability ratio negatively correlate with' corporate performance; through the further analysis between debt financing and corporate performance, for high growth and low growth businesses, debt financing are negatively correlated with corporate performance. That is to say, whether in high-growth or low-growth enterprises, the increase in debt financing reduces the company's performance to a certain degree. Compared high-growth Company with low-growth Company, the high-growth company has more firm performance. The results reflect the lack of debt financing and playing at a low financial leverage. It is possible that the effects of weak governance of debt financing has a close relationship to the over ship structure, soft-restrict of debt financing and insider control in the company., The fifth part are the conclusions, relevant suggests as well as the limitation research. Combined with the actual situation, this paper gives suggestions to strengthen the debt financing management and improve company performance.