A Study On The Influence Of Financing Structure To Corporate Performance Of The Listed Enterprises In China

In the Western world, the development history of MBO (Management Buy-outs) was more than 30 years. As a special form of Leveraged Buy-outs, MBO has produced a far-reaching influence on corporate resources allocation, structure optimization, technical innovation, and also on a country's industrial structure adjustment.In recent years, MBO has been implemented in some small and medium enterprises as well as some state-owned listed companies in China. The motivation of enterprise MBO is to reduce their agency costs, and establish effective incentive and restraint mechanisms to improve corporate governance structure. Financing structure plays an important role during the process of MBO, however, due to the special circumstances of China's policies and restrictions, MBO in our country has encountered a series of great difficulties.Generally, the value of the target is far more than the acquisition can afford, besides financial system in China is still not mature. There are many problems, such as less-developed capital market, not perfect law of finance, lagged development of investment banking, difficulties of financing through legal way. if not solved, those issues would block the development of MBO. Legally speaking, on account of lack of legal fund source, MBO finance becomes vague. Hence, to guide and regulate MBO is crucial. The purpose of the paper is to figure out a way to improve the efficiency of MBO in china, and build a construction model of finance, based on the reality of MBO in china and financing theories and practice of MBO in western countries, so to make the development of enterprises and economy more sustainable and stable.Moreover, this paper illustrates the financing structure of MBO from a theoretically and empirically based aspect. First, this article reviewed the classic theory of corporate finance structure in Western countries and the literature of domestic finance structure. Second, we analyzed the MBO financing structure in foreign countries, included the debt-led MBO financing structure in the United States, the equity-led MBO financing structure in UK, the government-led MBO financing structure in Japan, the bank-led MBO financing structure in Russia and Eastern Europe, then we got the characteristics of China's MBO financing structure based on the former comparison and analysis.In the empirical aspect, since the number of China's MBO is too small, we derived to use alternative sample data to get the relationship between China's MBO finance structure and corporate performance. We chose the financial indexes (2008-2010) from 210 sample companies whose data satisfied our research condition. The 210 sample companies were chose from the following three sectors: Metal and Nonmetal manufacturing, Clothing and Textile manufacturing, Plastic manufacturing. Then we chose 4 financial indexes which can descript the profit, operation, growth and solvency ability of the corporate to establish 8 regression models. Then we got the conclusions about the relationship between China's MBO finance structure and corporate performance through a correlation analysis, regression analysis and sensitivity analysis for the sample data.For these conclusions, the author makes several possible and reasonable explanations. At last, the article comes up with some suggestions to improve the acquisition performance of Chinese listed company. Totally, this paper is divided into 5 parts. Firstly, this paper introduces the background and research motivation and the importance of financing structure of MBO. Moreover, this paper illustrates the economic efficiency of financing structure from a theoretically and empirically based aspect. In the third chapter, the author chooses four financial indexes and uses the correlation analysis, regression analysis and sensitivity analysis approach to evaluate the enterprises'performance. Based on the empirical analysis, the author draws several conclusions. In the last chapter, the author makes several possible and reasonable explanations, and comes up with some suggestions to improve the acquisition performance of Chinese listed company.