Impact Of Debt Financing On Corporate Performance Based On The Different Nature Of Property Rights

Debt financing as an important financing way, directly affect the company’s capital structure. Different capital structure not only related to the cost of capital, funding decisions, governance structure, corporate performance and other internal problems, but also related to the rights and obligations of creditor, owner and operators. With the constant improvement of our capital markets, the company’s increasing emphasis on the importance of debt financing. However, because China’s capital market development time is short, all aspects of the market mechanism is not perfect, and a series of other factors, this led to the emergence of many unreasonable problems, such as lower the proportion of debt financing and unreasonable debt structure, and there is no effective play of debt financing incentives on corporate performance.Meanwhile, China has a special system of property rights backgrounds, different property companies differ by the level of budget constraints from the government, which leads to some differences of the governance effect of debt. With respect to the non-state-owned companies, in state-owned companies there are more natural relationship with the government and in the debt financing process it can be more supported by national institutions. Some state-owned enterprises take a certain policy tasks, not just for profit, so that when these state-owned enterprises are at a loss, the government needs to subsidize or protect loss-making enterprises. Therefore, due to the presence of differences in government support, the different nature of property rights may affect the effect of debt financing on the company’s performance.In this paper, we learn from the domestic and foreign relevant literature of debt financing and on the basis of Debt financing theory we combine with our special stage property system background to study the effects of debt financing of listed companies on corporate performance. Different industries have different operating characteristics. Different debt is not homogeneous. In China which is the world’s second largest economy and most populous country, manufacturing is the subject of the national economy and plays an important role in China’s economic development. Therefore, this article select manufacturing firms 2007--2014 year data as samples, and depending on the nature of the property, we study the effect of debt financing on corporate performance from the perspective of the total debt, debt maturity and different sources of debt.The descriptive statistics results show that the scale of company’s total debt financing is about 50%, and the proportion of state-owned listed companies is higher than the one non-state-owned listed companies; The average performance of Non-state-owned listed companies is higher than the average performance of the non-state-owned listed company. From the company’s debt maturity structure in China found that our listed companies mainly rely on short-term debt financing and have a lower proportion of long-term debt financing. At the same time, from the point of view of the source of financing, listed companies in China mainly use bank loans and commercial credit financing. Bank loan financing is still the company’s main source of financing, and the number of companies, with a lower proportion of corporate bonds, issuing corporate bonds is still less.Empirical regression results showed that there was a significant negative correlation between the total size of the debt and corporate performance. With respect to state-owned listed companies, in non-state-owned listed companies the total size of the debt is weaker negative correlation with corporate performance. There was a significant negative correlation between the long-term debt and corporate performance, and with respect to state-owned listed companies, non-state-owned company’s long-term debt is weaker negative correlation with the company’s performance. Short-term debt ratio and corporate performance are negatively correlated. Compared with non-state-owned listed companies, the negative correlation is smaller between short-term debt and corporate performance in state-owned listed companies and governance effect of short-term debt in state-owned listed companies is better. Bank borrowing rate is negatively related to firm performance. Compared with non-state-owned listed companies, bank loans ratio of state-owned listed has a weaker negative correlation with corporate performance. In the state-owned listed companies, commercial credit rate is no significant influence to corporate performance. The results shows that listed companies in China’s debt financing does not have a positive effect on corporate performance. In different ownership properties, there are some differences about the effects of different types of debt financing to corporate performance.Finally, combined with the actual situation, This article analyzes the causes of the empirical results and obtains that China’s capital markets are underdeveloped, various mechanisms are inadequate; Internal corporate governance mechanisms are inadequate and other causes lead to listed company debt financing structure is irrational;Debt financing is a soft constraint. and so on. According to research findings and cause analysis,in order to help debt financing in listed companies in China to play a positive effect to improve corporate performance, we made several suggestions: continue to improve the capital market mechanism to accelerate the development of the bond market, to broaden the financing channels for the company; constantly improve the management, financing, investment decision-making mechanism, optimize the financing structure; redefining the relationship between banks and companies, and strengthen banks credit constraints.