Research On The Impact Of The Debt Financing Of The Manufacturing Industry In China On The Corporate Performance

Researches of the company’s capital structure has been a hot topic in the field of corporate finance. Many domestic and foreign scholars have done a lot of work about the company’s debt financing affects the performance of company, and the theories can be classified as favorable, unfavorable and dual effect, and the empirical research results obtained are also different. Given many domestic researches only consider the overall level of debt for the company’s role in the performance, and few will study the structure of liabilities, but different types of debt mechanism for corporate performance are not the same, so this article study the liability term, sources,and capital costs. Moreover, the scope of the current domestic listed companies in the manufacturing sector debt and corporate performance very few, and taking into account the different characteristics of different industries will make the various impacts on debt financing for firm performance, and many China’s manufacturing companies are in the state-owned background, their sizes of assets are generally relatively large, the proportion of fixed assets to total assets is high, a large investment expenditures, frequent use of commercial credit, etc., this article will study manufacturing listed companies, to explore the relationship of debt financing and corporate performance, to analyze the mechanism of the effects of different types of debts for the company performance. The empirical results show that China’s manufacturing companies’debt level and corporate performance are negatively correlated; as the term of the liability, neither current liabilities nor non-current liabilities has no positive effect on the company’s performance; as the source of debt, the bank deposits is not conducive to improving corporate performance, while the commercial credit could improve the corporate performance; as the cost of debt financing, the non-interest-bearing liabilities is good for the corporate performance, while the interest-bearing liabilities could not improve corporate performance. These conclusions result from our financing environment and systems, the profitability and operating characteristics of China’s listed manufacturing companies. To the end, this paper also give some policy recommendations that can be referenced.