Research On The Relationship Between Main Business Profit Margin, Agency Cost And Entrusted Loan Scale

In recent years, As China has gradually adopted prudent monetary policy, money supply in the market was slightly tight. With large amounts of cash in hand, some listed Companies provided money for small and medium enterprises that were facing financing difficulties. However, if the listed Companies issued too much loans, it would bring many negative effects. For example, the healthy development of those listed Companies would be harmed, the national macro-control policy would be disturbed. Therefore, we need to study the behavior of listed Companies entrusted loans, and analyze influence factors about the listed Companies entrusted loans scale.In this paper, we searched listed Companies announcements one-by-one in Wind Database, and collected the sample data of Chinese listing Corporation entrusted loans from 2007 to 2012. Through descriptive statistics analysis on the data, we make a comprehensive analysis on the listed Companies entrusted loans status, industry characteristics and effects. In addition, by using multiple linear regression method, we study the factors that affect the listing Corporations entrusted loans scale. Especially, we focus on the situation that borrowers are non affiliated enterprises and draw those conclusions:If borrowers are non affiliated enterprises, (1) the possibility of listing Corporations entrusted loans scale is more obviously reverse change relations with main business profit rates, that is to say, to achieve short-term gains, listing Corporations with poor main business are more likely to lend to non affiliated enterprises. But doing this frequently will harm the entity industry and shake the foundation of social sustainable development. (2) the possibility of listing Corporations entrusted loans scale is more obviously reverse change relations with the square of the largest shareholder proportionate stake, probably because the non associated samples in this paper belong to shareholders scattered situation. Shareholders were unable to effectively supervise executives, so executives could issue high interest loans to obtain short-term gains. However, these behaviors are not conducive to the listing Corporations main business. Once these financial investments are excessive, listing Corporations will reduce their main business investments. This can even cause hollowing entity economy.Listing Corporations entrusted loan abuses will seriously affect the development of their main business. To avoid this, we should improve the relevant laws and regulations, strengthen the regulation of listing Corporations and commercial banks.