An Empirical Study Of Industry Competition, Corporate Social Responsibility And Debt Financing

During the process of China’s becoming the second economy in the world, the contribution of China’s listed companies on economy is outstanding. As the most important and special enterprise groups, China listed companies, which are bearing the important task of supporting the development of the domestic economy, should not only traditionally be required to strive to improve the level of profitability and the real return on investment to shareholders, but also to fulfill their social responsibilities and establish a good social image to put forward higher requirements. For modern companies, the financing capacity is particularly important to the company’s development. The community’s help plays an important role in the process of financing and refinancing. Listed companies with good social image and reputation will directly affect the financing capacity. In fact, in all financing channels, debt financing plays a very important role for the company’s external financing and growth. How to improve the listed company’s debt financing capacity through good social responsibility? Especially in today’s industry, the competition environment becomes more intense and dynamic, the company has to make differentiated debt financing decisions according to the specific features of competition in the industry, so how the competition in the industry exactly affects the company’s debt financing? Whether industry Competition will adjust the relationship between the corporate social responsibility and debt financing decisions? These issues are worthy of discussing and empirical tests.Taking into account the characteristics that listed companies nested in specific industries, industry competition characteristics may not only directly affect the behaviors of the company, but also play a regulatory role in the mechanism between company’s behaviors, so by using 2007-2011 data of China’s Shanghai and Shenzhen A-share listed companies,the study will be based on multi-level models between company and industry to analyze the relationship between industry competition, corporate social responsibilities and debt financing. Research shows that:(1) Industry competition has a direct affect on debt financing. High CSR performance will significantly reduce the cost of debt financing, make it easier for companies to obtain short-term debt financing, and will significantly improve the company’s debt financing tool structure, specifically, will significantly enhance the commercial credit financing ratio, reduce the ratio of bank loans and bond financing. (2)Competition in the industry has a significant direct impact on debt financing decisions of listed companies, and the fierce competition in the industry will lead directly to higher debt financing costs, reduce the financing needs of the commercial credit industry, but correspondingly it will enhance the ratio of bank loans and bond financing, but competition in the industry has a non-linear effect on the company’s debt maturity structure decision-making.(3)Competition in the industry has a regulatory role, be able to adjust the relationship between corporate social responsibility and debt financing. Specifically, in a competitive market environment, the better the performance of corporate social responsibility is, the lower cost of debt financing companies will face. The enterprises will receive a greater percentage of commercial credit financing, but will reduce the proportion of bank loans and bond financing, and thus a regulatory role on the company’s debt maturity structure is found, leading to the increase in the proportion of short-term debt financing.