Correlation Financing Rate Medium-term Notes And Corporate Value

Since Modigliani and Miller published "the cost of capital, the value of the companyand investment theory" in1958, MM theory was born. Since its debut, the research of thecapital structure theory has entered into a new stage of research, a new discussion aroundthree main focus, namely: Whether the capital structure and the corporate value relevance,optimal capital structure exists, what are the determinants of capital structure.Fundamentally speaking, their starting point is the relationship between capitalstructure and enterprise value. Since it appeared in the principal-agent theory, signalingtheory and control theory, each trying to influence on company value from the aspects ofdifferent capital structure. In the capital structure, debt financing is an important financingchannels for enterprises, on the financing of the current situation, the majority of China’slisting Corporation prefer stock financing, debt financing amount is small, the capitalstructure was unreasonable, debt is difficult to play its positive effects, in this case, researchon Optimization of capital structure become important. But China’s bond market lags behind,slow development, long-term debt financing instruments lack, which resulting inunreasonable long-term debt proportion.The medium-term notes Lunched in2008which in favor of optimizing capital structurerich debt financing. At the same time,it well fill the current shortage of1～5years ofcorporate bonds varieties. The medium-term notes mainly refers to a kind of financing billwhich need registration approval by the regulatory authorities. In the registration period,itcan batch issued. Compared with corporate bonds, medium-term notes has certain advantageson the issue of flexibility, financing cost and financing security etc. Its period was3to5years, and the threshold is low, the procedures is more simple than other bonds. Since itsbeginning, the development speed is rapid, quickly became the darling of many large andmedium-sized state-owned enterprises, the circulation amount was large, the market responseis good. Any new things must go through a period of development to be gradually matureand perfect, this paper argues that as a kind of new debt financing tool, the medium-termnotes will have greater development in the future. In accordance with the revised "MMtheory", in a certain range, increase in liabilities will increase enterprise value. When thecompany debt ratio reaches a certain limits (such as30%), The tax benefit of debt financingwill greatly exceed the cost of equity capital rising loss, increases with the debt ratio, debtincrease losses will exceed debt tax revenue. As a new type of debt financing instruments, inaddition to the unique, it also has a general role of debt financing tool. Therefore, study on the influence of the medium-term notes financing of enterprise value will provide thereference for the choice of the financing way of the listing Corporation, which has theoreticaland practical significance.In this paper, the relationship between the medium-term notes financing rate and thevalue of the company as a research topic. Try to research the relationship between billfinancing rate and enterprise value. Taking into account that different property right relationsmay have different effects on the relationship between the two, this paper will be listedcompanies into state-owned listing Corporation and non state owned listing Corporation.Focus on that the state-owned listing Corporation enterprise value and medium-termfinancing rate, and tries to discover some problems and put forward countermeasures andsuggestions. In this paper, a combination of normative and empirical, first analyzes thepresent situation of debt financing of state-owned enterprises in China, from the status quo todig out the problem and solve the problem of personal understanding and suggestions. Thepaper use comparative study methods, empirical analysis on the relationship between themedium-term financing rate and the value of the company. According to the results found,the medium-term financing rate and the enterprise value of the state-owned listingCorporation has a significant negative correlation, non state owned listing Corporationfinancing rate and enterprise value presents the "inverted U", which in a certain range beforethe medium-term notes, financing and corporate value is positive correlation, more than thisvalue, the medium-term financing rate and enterprise value presented negative correlation.