Research On Sustainable Growth Problem Of The Agricultural Listed Company In China Based On The Financial Perspectives

As agriculture being the foundation of our national economy, the CPC CentralCommittee has issued “No.1document” themed on issues of agriculture, rural areasand farmers for eight consecutive years from2004to2011, stressing that issues ofagriculture, rural areas and farmers should be given the top priority in the period ofsocialist modernization. Agricultural listed companies, an emerging enterpriseorganization due to the advanced agricultural productivity at the current stage, canrely on their advantages in capital, organization and system to vigorously open themarket and push forward agricultural industrialization. However, agricultural listedcompanies in China haven’t played a fundamental role in that their quantity doesn’tcorrespond to the importance of agriculture and their quality is also a big concern.There are a series of problems arising in the development of listed agribusiness, whichare characterized by poor market performance, declining main business, faultydiversification and serious deviation from agriculture. These problems have alreadyled to the overall poor operating performance and increased operating risk in ouragricultural listed companies, which inevitably affect their competitiveness andsustainability.The sustainable growth theory stresses on the coordination of enterprise’s growthrate and financial resources, holding that neither overgrowth nor too-slow growth canreach the optimal growth rate the financial resources can support and neither canattain a sustainable growth. Many corporations regard growth as the primary issue andblindly pursue high growth, while overlooking the limitations of financial resources tothe point of financial crisis. However, there are also some corporations that stuntgrowth to evade the risks induced by high growth, leading to incomplete utilization ofenterprise resource and unfavorable conditions for sustainable growth. Therefore,enterprises should set proper objectives for growth in order to realize an optimalgrowth rate with limited financial resources, thus maintaining a healthy andcontinuous growth.On the basis of an analysis of the current situation of agricultural listedcompanies in China, this paper studies and analyses the sustainable growth conditionsof these companies by adopting the sustainable growth theory. First, the sustainablegrowth rate and the actual growth rate are obtained through the Sustainable GrowthRate (SGR) model. Then, Wilcoxon’s Sign Rank Test is adopted to evaluate whether these companies have attained sustainable growth. Finally, factor analysis andmultivariate statistical regression model are used to analyze the contributing factorsfor the sustainable growth in agricultural listed companies. The empirical studyindicates: sustainable growth hasn’t been attained in agricultural listed companies onthe whole and the actual growth rate is greater than the sustainable growth rate, orovergrowth; profitability, growth potential and operating capacity all have significantinfluence on the sustainable growth rate; the disparity between actual and sustainablegrowth rates is only influenced by enterprises’ potential for growth. At last, this paper,from the perspective of finance, puts forth some suggestions for a sustainable growthof agricultural listed companies in China on the basis of the SGR model andconclusions of the empirical study.