The Relationship Between Listed Companies’ Financial Structure And Output Of China Under The Impact Of Financial Crisis

The economists have been very concerned about the areas of financial crisis andcapital structure. Systematic exposition of the financial crisis can be traced back in thelate19th century, the scientific theory of financial crisis proposed by Marx based oncapital movement theory and the theory of labor value. After that, most of the academicstudy of the financial crisis concentrated in the impact on financial stability fromforeign exchange market, monetary policy and fiscal policy at the macro level. The thirdgeneration model of financial crisis started to break the framework of macroeconomicanalysis, exploiting the financing structure factors in the theoretical model, aiming atthe relationship between the microscopic individual characteristics and financialstability. Subsequently, Bernanke, et al reasonably explained the output largefluctuations caused by small shocks with financial accelerator theory proposed by them.The subprime mortgage crisis arises from the U.S. in2007, detonated a globalfinancial turmoil and a lot of damage on the real economy. In the process of globalintegration, China as the largest developing country in the world, also cannot immune inthe financial turmoil. Based on the financial crisis background, this article starts withthe micro perspective of corporate finance structure and studies the decline of the outputlevel caused by the financial crisis, trying to make contributions from the theoretical andpractical level. This paper constructs empirical models containing the financial structureon the basis of summing up the results of previous studies and primarily based onBernanke’s financial accelerator theory. Empirical analysis uses balanced panel datafrom2005to2011, China’s A-share listed companies, focusing on the enterprise overalldebt levels, type of debt structure and the relationship between debt maturity structureand output volatility. In addition, Chow breakpoint test is utilized on the regressionmodel. Some conclusions are obtained: high balance rates would have a negative impacton the output of enterprises during the crisis; enterprises with higher dependence onbank loans, have the greater output decline in the impact of the financial crisis;commercial credit and corporate bonds can ease the accelerated decline of output causedby the financial crisis; excessive short-term debt ratio makes companies vulnerable to liquidity shocks. Besides, the transmission mechanism that financing structure affectscorporate investment through financing costs and thus affects output is verified by usingthe two-step method. In the case study section, two listed companies, SichuanExpressway (601107) and New Hope (000876), are selected to utilize "double case"analysis. By accessing to relevant documentation, and research interviews, the empiricalresults are replenished, and the applicability of western capital structure theory is testedin Chinese market. Finally, the paper concluded on the basis of empirical research andcase studies that the enterprise creates debts moderately, expands the financial channelsand optimizes the financial structure. Also, the governments should speed up thedevelopment of the bond market, strengthen the specification of commercial credit andactively promote the reform of interest rate market.