Debt Financing Of Private Listed Enterprises In The Background Of Financial Crisis

Since China adopted its policy of reform and openness for the last30years, rapidgrowth has taken place in private enterprises, and private economy has become vitalstrength in national economy and social development. However, crisis in financingwhich limits its development and existence has still been a historic topic. The globalfinancial crisis caused by subprime mortgage crisis spread quickly at the end of2007.Facing such serious situation, the state council issued a four trillion investmenteconomic stimulus plan and ten big industries re-energizing planning in late2008,which make state-owned enterprises have more policy support and resource. But forprivate enterprises, not only do these planning do no help to drive folk capitalinvestment, but they also squeeze the development space of private economy to acertain degree. What’s more, with the deepening of financial crisis and slowdown ineconomic growth in China, capital chain has been subjected to severe test in privateenterprises. Crisis in financing has really become bottleneck in restricting thedevelopment of private enterprise as well as employment and economic growth,which finally restricts social stability and development. So it is of great significance todiscuss the present situation of private enterprises’ debt financing and put forwardsome useful advice to promote development and maintain stability.In the background of the2008financial crisis, this paper selects2008to2010years’ data of949listed enterprises (602state-owned holding enterprises and347private holding enterprises) in Shanghai and Shenzhen A-share market as researchsamples. Firstly, based on corporate capital structure theory, this paper makes adetailed analysis of the debt financing’s three special corporate governance functions,namely incentive and restriction function, signal transfer function and shifting controlfunction. Then, proceed from current situation, this paper analyzes the characteristicsof debt financing in private listed enterprises and the causes of bank’s credit crunch toprivate listed enterprises. After that this paper does further empirical research on therelationship between ownership system and debt financing and the relationshipbetween debt financing and enterprise performance. The research results indicatethat：firstly, compared to state-owned enterprises, private enterprises has less bankloans, fewer long-term loans and bank loan term structure is significantly shorter;secondly, higher debt rate means lower enterprise operating performance, and privatelisted enterprises are superior to state-owned listed enterprises in the way ofemploying debt financing. To improve the status of debt financing in private enterprises, we cannot dowithout their own efforts of private enterprises, kind efforts of relevant financialintermediaries as well as the positive guidance of the government’s policy. Privateenterprises shall actively improve their faults, which is a prerequisite for improvingthe status of debt financing in private enterprises. Financial intermediaries,represented as banks, shall provide the credit capital support for private enterprises.And the government should publish relevant policy to actively guide and activateprivate investment.