An Empirical Research On Short-Term Debt Structure And Enterprise’ Inefficient Investment Behavior

As the two basic financial activities of modern enterprises, financing andinvestment activities have been the research keys of finance and business theory,and many scholars researched the relation of companies’ debt financing withinvestment behavior. So far, most studies focused on researching the relation ofdebt scale, debt maturity structure with investment behavior, but rarely involveddebt sources structure especially short-term debt structure. In the present situationof long-term debt’s management function failed and short-term debt had dominantstatus in China’s listed companies, only studied debt scale and debt maturitystructure were not enough, because short-term debt structure also causes listedcompanies’ inefficient investment problem. Therefore, through the analysis of therelation of listed companies’ short-term debt structure and investment behavior, ithas great theory and practice significance to further improving the capital structure.After summing up domestic and foreign related literatures of debt, debtmaturity structure, debt sources structure and investment behavior, the paperchoose our country’s A shares listed companies in Shanghai and Shenzhen from2002-2010years as the research samples, through establishing regression model tostudying the relation of short-term debt structure with inefficiency investment oflisted companies, the inefficient investment behavior was defined by Richardson’sresidual measurement model, the paper took sales income, free cash flows andTobin’s Q as control variables and introduced time and industry dummy variables,then the paper analyzed different influences of short-term debt structure oninvestment behavior in the listed companies of different equity nature, finally wewould further verified the hypotheses.The conclusions shows: over-investment and under-investment phenomenoncoexisted in China’s listed companies, which the numbers of under-investmententerprises were more than over-investment enterprises, but the degree ofover-investment was more serious than under-investment; In over-investment group,the relation of short-term loan and commercial credit with over-investment were allnegative correlation, which meant short-term loan and commercial credit all could inhibit over-investment of listed companies, and either in the total samples or in thelisted companies of different equity nature, commercial credit had more remarkableinhibition, compared with the state-owned listed companies, short-term loan andcommercial credit had stronger inhibition to over-investment in non-state ownedlisted companies; In under-investment group, short-term loan and commercialcredit with under-investment were all positively related, namely they couldaggravate under-investment behavior of listed companies, and either in the totalsamples or in the listed companies of different equity nature, commercial creditshowed more significant aggravation than short-term loan, compared with thestate-owned listed companies, the aggravate effect of short-term loan andcommercial credit to non-state owned listed companies investment were moreserious.Through above analysis, the paper offered following policy proposals forperfecting short-term debt structure and improving investment efficiency of China’slisted companies:(1)Reducing state-owned shares ratio of listed companies,lowering equity concentration;(2)Advancing state-owned commercial banks reform,establishing bank governance mechanisms;(3)Strengthening listed companies creditmanagement, reducing credit crisis;(4)Developing bonds market, broaden financingchannels;(5)Perfecting legal system, protecting creditors’ interests.