Research On The Impact Of Corporate Debt Financing On Operating Performance

In recent years, small and medium-sized enterprises have witnessed great development and played a remarkable role in activating market economy and promoting social employment. Characterized by short construction cycle, quick earnings, high ability in adapting to market variations and feasible mechanism, it is gradually becoming the main force in economic development in our country. However, in its process of development, small and medium-sized enterprises often encounter difficulties of lack of funding and financing obstruction. In addition, because of the existence of the special bank-enterprise relations, it is difficult to financing from banks, which imposes restrictions on the development of small and medium-sized enterprises. Therefore, based on the current situations of debt financing of small and medium-sized enterprises in Shandong province, this study attempts to analyze how debt financing exerts influences on the state of operation, aiming to optimize the structure of debt financing in enterprises and improve its value.First and foremost, previous studies on the impact of debt financing on operating performance are summarized at both home and abroad, followed by theories related to debt financing, such as MM theory, equilibrium theory, agency cost theory, signaling theory and control theory, and the impact of debt financing on operating performance is analyzed in theory. Afterwards, the current situations of debt financing of small and medium-sized enterprises in Shandong province are analyzed, finding that high debt financing existing in enterprises. Specifically, their asset-liability ratio reaches up to 70%, debt maturity structure is unreasonable and the short-term debt ratio is too high.Financial data of small and medium-sized enterprise in Shandong province from 2010 to 2013 are used as sample, and the operating performance in enterprises are measured from four aspects, namely, profit ability, operation ability, debt paying ability and development ability, during which eleven financial index are measured and their synthesis score is calculated based on factor analysis. In order to analyze the impact of debt financing on operating performance in enterprises, regression model is established from aspects of the scale, maturity and channels of debt financing for empirical analysis. The result indicates that significant correlation do exist between the structure of debt financing and operating performance. Specifically,(1) As for the scale of debt financing, negative correlation exists between asset-liability ratio and operating performance, while the influences made by new debt and initial ratio on operating performance is positive.(2) As for the maturity of financing debt, the correlation between short-term debt ratio and operating performance is negative while the correlation between long-term debt ratio and operating performance is positive.(3) As for the channels of financing debt, the correlation between business credit ratio and operating performance is positive while the correlation between bank loan ratio and operating performance is negative. Finally, based on empirical results, suggestions on optimizing the debt financing structure in small and medium-sized enterprises are provided, such as decreasing the overall level of debt financing, increasing long-term debt, creating favorable business credit, broadening debt financing channels etc, aiming to improve operating performance and provide guidance and reference for the development of small and medium-sized enterprises in Shandong province.