The Impact Of Debt Financing Of Small And Medium - Sized Listed Companies On Firm Performance

Compared with the motherboard listed companies, the small and medium-sized board listed companies are mostly private enterprises which have larger financial difficulties and higher risks. Because of differences in operation, scale, financing costs, earnings volatility, guarantee ability and owner concentration, the small and medium-sized board listed companies show different financing risk control capacities. Based on the above, this article divides the samples into three types (the strong, weak and ordinary ones) to analyze the impact of debt financing on firm performance from three parts of financing scale, type and term, especially including the bond financing which is important and developing quickly.Firstly, this article states the theory and transmission mechanism how debt financing affects the firm performance. Secondly, we obtain the comprehensive evaluation index system of enterprise performance by using factor analysis of samples. Thirdly, we measure and divide all samples into three categories by binding entropy method and K-Means clustering analysis based on the view of financing risk control capacity. Finally, we make the empirical comparative analysis about the impact on corporate performance caused by debt financing.Our findings are as followed. Firstly, the small and medium-sized board listed companies depend more on bank loans and trade credit financing, but the company owners are more emphasizing on the bond financing. Secondly, the debt scale of strong and weak samples has a negative effect on firm performance, while the ordinary ones’shows a positive effect (10% significance level). Thirdly, for the strong samples, the bank loans can’t improve firm performance, but the trade credit and bond financing can. For the ordinary samples, the bank loans and bond financing (the effect is weak) can improve the firm performance, but the effect of trade credit financing isn’t notable. For the weak samples, the bank loans’ positive effect is weak, while the trade credit and bond financing don’t pass the significance test. Finally, the long-term debt of strong samples shows weak positive effect on the firm performance, while the ordinary and weak samples don’t pass the test. The short-term debt of all kinds of samples shows negative effect on firm performance.