Research On The Influence Of Financing Structure On Investment Of Domestic Listed Agricultural Companies

It is always the key point of finance theoretic research whether and how financing structure influences corporate value. However, financing structure doesn't associate with corporate value directly; instead, it acts through the following flow:financing structure→investment behavior→investment yield→corporate value. This research stands on the first link, paving the way for exploring the whole flow.The panel data in the annual reports of domestic listed agricultural companies from 2004 to'2008 were selected for this study. Asset-liability ratio and external financing increment were referred to as the variables of corporate financing structure (explaining variable), while investment expenditure as the variable of investment behavior (explained variable). Meanwhile, internal cash flow, Tobin's Q value and sales income were referred to as control variables. An empirical research was conducted for the financing structure and investment behavior of listed agricultural companies. Further, the effect of financing structure on investment behavior was analyzed from 4 points of view, including company scale, growth opportunity of a company, risk transfer motivation and the internal division of agricultural industry.Through this empirical analysis, following conclusions can be drawn:①the whole debt capital is apparently small, and it's the small external financing increment that results in insufficient investment.②the larger a company is, the easier it is to attract external financing, and a stronger pull on investment.③Growth ability exerts a small impact on the pull of a company's capital structure to its investment.④High-risk corporations prefer external equity financing, and the profits of their prime operating revenue exert a strong pull on investment.⑤Corporations depending more on the land prefer external debt financing.Combining finance knowledge and the practice of agricultural enterprise, the cause of above phenomena can be explained from several aspects:①the low rate of return of agricultural items determines a weak attraction to capital and therefore insufficient investment.②large-scale corporations possess a strong ability to resist risk, attract capital and invest.③short-term behavior influences the growth of agricultural companies.④the managing mechanism of high-risk corporations is not well developed and their core competition exerts a great impact on investment behavior.⑤orporations depending more on natural force prefer external debt financing in order to transfer risk.Based on the above analysis, suggestions are made as following to improve the payoff ability of domestic listed agricultural companies:①state support emphasizing emphasis on lowering the cost of agriculture in order to increase their income.②poling the capital to support large corporations instead of a wide spectrum.③associating government capital support with corporate short-term behavior.④supporting high-risk corporations while emphasizing on their managing mechanism and core competition.⑤establishing a mortgage financing system of agricultural land access.