Off-balance Sheet Financing, Financing Structure And Corporate Value

Off-balance-sheet(“OBS”) financing refers to a financing behavior that not been reflected in the balance sheet. In recent years, driven by a wave of financial tool innovation China’s OBS financing is developing rapidly. More and more companies started to use complex OBS financing method to raise funds. It causes the attention of society, the academia and regulatory authorities began to carry out deep and systematic study on the philosophy of innovation and regulatory coordination. But those existing researches mainly concentrated in bank’s off-balance sheet activities, operation leases, asset securitization and they recognition, measurement, disclosure or operation. Most of these studies are theoretical. On the one hand is due to a lack of attention to the study, on the other hand is due to the related data is not available.On the basis of relevant theories, this paper first introduces the definition and innovation of OBS financing, than simply introduces operation leases, briefly illustrates its OBS influences. Based on predecessors’ research results and the basic theory of financing structure, we try to analysis “how dose the company’s capital structure affect non-financial institutions’ OBS financing ”and “dose appropriate OBS financing will improve the value of company?” two questions. It reveals that the effects of OBS financing on the value of company are mainly in three aspects. Firstly, OBS financing changing the capital structure to reduce the cost of financing, directly increasing company’s investment. Then it influences the market by delivering accounting information, as well as brings business initiative and pressure. At last, we select operation leases as research objection, do empirically test by using all the data of A-share non-financial listed companies from 2009 to 2013. The theoretical analysis verified by empirical results in the end.Through theoretical and empirical research, we finally conclude that on the one hand, for saving the cost of financing, improving cash flow, concealing the real financial situation, companies with high leverage are more likely tend to OBS financing. OBS financing, on the other hand, will help improve the value of company.Finally, the paper puts forward three suggestions. At first, with the joint efforts from regulatory authorities, accounting standard setters and the company, we should improve the existing accounting system and related laws. Secondly, insisting on coordinated development of innovation and regulatory, strengthening supervision by improving the information transparency of OBS financing are both important to ensure the healthy development of OBS financing. Thirdly, through strengthening accounting information disclosure, improving the quality of accounting information and the pay system, perfecting the risk management, it can guarantee the stability of the capital market.