Study On Financing Strategy Of High-tech SMEs

This thesis used empirical and normative research to study the finance strategy of high-tech small and medium-sized enterprises (SMEs). It is essential to find a practicable solution to the problem of high-tech SMEs finance in theory and practice.Using a sample of 106 Beijing, Shanghai, Taiyuan and Shenzhen high-tech SMEs, the author examined the capital structure of high-tech SMEs. Consistent with the findings on financing for other SMEs, internal funds are the most important source of funding in high-tech SMEs. However, in apparent contradiction to the Pecking Order Theory, high-tech SMEs use outside equity in preference to debt. From these results, it is concluded that equity-debt ratio ranging from 1.6 to 3.9 is positive correlated with enterprise age of high-tech SMEs. It is suggested that the weighted average of equity-debt ratio, 2.3, is optimal for high-tech SMEs.The study has been carried out using the method of comparative static analysis. With Black—Scholes model, the author concluded that in many cases high-tech SMEs founders prefer outside equity to debt. With Allen—Gale model in Comparing Financial Systems, the author drew a conclusion that in many cases high-tech SMEs founders prefer indirect financing to direct financing. From the point of view of Financial Growth Cycle Theory, it was found that the imperfect market leads to Pareto improvement in indirect financing, and that our country should take some measures to diminish the influence of the imperfect market so as to improve indirect financing of high-tech SMEs.VC is the optimal financing choice for high-tech SMEs. Moreover, this thesis examined the relationship between a VC and high-tech SMEs. The model used by the thesis is a multi-period game theoretic model with moral hazard where the contract was set in the first period.