Empirical Research On The Influence Of Debt Financing On Corporate Investment In The Sight Of Ownership Structure

The core of the dissertation belongs to the development of the capital structure.That is whether the financial leverage would affect the investment and the value of theenterprise. The famous MM theorem formed the foundation of modern capitalstructure theory, with a series of stringent assumptions. MM theorem considers thatthere is no relationship between behavior of financing and investment. However, thereis no possibility to implement the stringent assumption. Other scholars relaxed thestrict assumptions of MM theorem, and found that the financing would affect theinvestment activities in the subsequent research.The centralization of the ownership structure and, the existing of thestated-owned shares, can affect both the financing and the investment of the firm.Fewer similar works on the leverage’s constrainting effect on investment andcorporate value, have been conducted in China, from the perspective of ownershipstructure.Full-text is divided into five sections. First part introduces and describes some ofthe major topics of this paper, the background and significance. And then,the secondpart makes a summarization of the relevant theoretical and empirical studies, in orderto find the direction of an in-depth research. The third part analyzes the presentsituation of debt and investment in China, such as intension, present situation andcharacteristic. The forth part makes an empirical testing based on the panel data ofChinese listed companies of1999-2008. Finally, giving the conclusion of the study ofthis dissertation,as well as policy recommendations.The results of empirical research in part four reveals that: In China, there is anegative relationship between a firm’s investment and leverage, which is significantonly for low-growth firms. A higher level of state-owned shares and of shares held by the largest shareholder tends to weaken the disciplinary effect off debt on firminvestment. The presence of challenging shareholders, can impose a strengtheningeffect.According the results of this article, we give the conclusion of the study of thisdissertation, as well as policy recommendations.