The Research On The Impact Of Short-term Debt Financing To Firm Value

Debt financing is the main way of financing business, short-term debt financing is the concrete form of debt financing.Under the ground of ignoring short-term liabilities, it’s more practical and theoretical to analyze the influence on short-term liabilities to firm value. Short-term debt financing that impacts on debt structure, thus on the capital structure and ownership structure, will inevitably have a direct impact on firm value. At present, because China’s capital market is not perfect, short-term debt financing that has many factors which how to identify and analyze has become a current problem to be solved. Basing on the above issues this article targeted for the theoretical and empirical analysis, and draw relevant conclusions.This paper selects the real estate industry as the research object, selects the data of financial statements of the real estate firms from2008to2010to make an empirical research. This paper begins with theory, summarizes in the following opinion:First, comparing to the advantages of long-term liabilities, Short-term debt financing will help businesses make financial decisions; second, short-term debt financing instruments and the distribution structure impact on the solvency liabilities; third, interest and exchange rates greater impact on short-term liabilities; Fourth, the cycle of production affects the way of financing debt. From the empirical analysis, this paper gets the following conclusions:First, firm value and short-term liabilities are positive correlation, because the short-term liabilities can increase the demand for capital firm, while reducing capital costs can be tax deductible; second, the business value of different ways to assess is corresponding to different factors, but the common factor is the ratio of short-term relationship between debt and equity. The ratio between them is negative correlation, because the short-term debt financing increases the overall risk financing, changes capital structure, increase funding costs, makes creditors more involved in the distribution of operating result, which will shrink in value of the remaining firms.Through this study, I believe that real estate firms should pay attention to short-term debt financing, focusing on short-term debt to capital structure and capital costs by optimizing of capital structure, make the annual budget and plan short-term liabilities, and strive to enhance firm value.