| SME is an important part of our national economy, which plays an important role in the development of national economy. Due to the high degree of asymmetric information for SMEs, there are a lot of debt financing difficulties faced by SMEs in China, such as high financing costs, credit discrimination and many other issues, which restrict their development. Equity investments(PE/VC) have successfully developed for over two decades in China. With their keen investment perspectives, professional investment teams, effective management after investment, PE/VC have earned themselves good reputation. PE/VC not only brings equity financing for SMEs, but also improve the operation and management of SMEs in different ways. Therefore, this paper aims to analyze whether PE/VC can solve the debt equity financing problems of SMEs in China.Based on signal theory, contract theory and financing theory, this paper constructs a framework to analyze the influence of equity investments on corporate debt financing, and use corporate credit as an intermediate variable to study the specific differences between the equity screening effect and value-added services effect on the probability of corporate credit risk. Finally, based on the data of companies of over-the-counter market for growth enterprises from 2010 to 2014, the paper carries on an empirical analysis. The results show that(1) compared with non-PE/VC backed firms, PE/VC-backed firms have more debt and lower cost of debt.(2) The larger number of PE/VC joint, the more shares they hold, the longer they hold their shares, the more debt and lower cost of debt can be achieved.(3) Both screening and value-added services have negative effects on corporate credit risk, which can promote corporate debt financing in the end.(4) The reputation of PE/VC has a significant impact on corporate debt. The higher reputation of the PE/VC can result in more corporate debt financing and reduce more corporate debt financing costs. |
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