Research On Chinese Listed Companies' Financial Guarantee

In market economy, financial guarantee can facilitate enterprises to obtain capital from banks, and ensure the benefits of financial institutions. It has ever played a positive role for the development of our Chinese listed companies. But in recent years, attributed to deficiency of listed company's internal management and external regulation system, many serious problems about its financial guarantee have occurred on security market, which result in various risks for listed company itself and some related parties. Therefore it is of great importance to seek the current problems about listed company's financial guarantee and analyze the relevant reasons.The thesis firstly explains the concept of financial guarantee, the mechanism of its coming into being and its risk, describes the development of Chinese listed companies' guarantee activity and discloses the problems by analyzing the guarantee information declared from 2002 to 2006, then mainly analyzes the risks resulting from it and the causes resulting in the problems by combining theoretical and empirical study. Finally, the thesis puts forward some suggestions to solve the problem.The main conclusions of the research are as follows:(1) By analyzing the statistics of financial guarantee from 2002 to 2006, the thesis discloses the problems in Chinese listed companies' guarantee activity. A great number of companies were involved in financial guarantee frequently even if some of them were in financial troubles and couldn't provide liable warranty, and the figure was increasing. So the sum of guarantee money was enormous. Because of the too long guarantee term, the too complicated guarantee relationship and insufficient information disclosure, Chinese listed companies' guarantee activity caused great risks.(2) Chinese listed companies' guarantee activity influences their own and loan banks' management, the benefits of shareholders who hold small amount of stocks, and even affects the whole security market and the financial system in the area.(3) Empirical study of Chinese listed companies' financial status in 2002 to 2006 shows that the financial risk of guarantee listed companies was higher than those of non-guarantee companies; after offering guarantee to other companies, the listed companies' financial status became worse and worse.(4) There are a comprehensive set of causes resulting in guarantee problems. The short of financing methods and the advantage of listed company as warrantor lead to the situation that too many listed companies are involved in guarantee; the shortcoming of internal regulation is the basic reason; the faultiness in banks' anti-risk measures is the source of the problem; the laws and regulations' deficiency, accountants' neglect, the government's interference and the lack of credit boost the problems and finally produces the serious results.(5) Empirical study of the causes shows that the listed companies with high guarantee level could get high profits, which controlled loan banks' risks, but increased their own risks. Among listed companies, the worse the management was, the higher the guarantee level. In the listed companies with high guarantee level, the dominant shareholders held lower proportion of shares, the state shareholders had large proportion of stocks and shareholders of circulating stocks possessed small amount of stocks.Based on above research and analysis, the writer puts forward the following suggestions to solve the problem: to improve the listed company's internal regulation by the reform of shareholder's rights and the system of independent directors; to strengthen the internal controlling system of financial guarantee; to develop the methods of financing; to reinforce the bank's inspection and the supervision to listed companies' guarantee activity.Though the writer made great effort on the thesis, owing to the writer's limitation on knowledge and capability, there are some standpoints and conclusions which need to be improved.