Research On The Impact Of Bond Financing On Company Performance

In China,companies tend to have strong stock financing preferences,which leads to the result that bond financing hasn't drawn enough attention or been well-used in China.Bond market of China starts pretty early but develops relatively slowly.Corporate bond financing starts in 1980s,and it has approached to mature stage after going through infancy,rapid expansion,regulation and regulated development.In recent years,corporate bond financing has grown rapidly in China,especially after the regulation of 2015 which reduces limits on the issuer of corporate bonds.In 2015,Chinese companies issued corporate bond to the size of one trillion yuan,and in 2014 it is only one hundred billion yuan.The development of corporate bond financing can not only diversify financing channels but also offer more investment bets for investors.It's good to economic development and financial stability.However,the increase of corporate bond financing also comes with the increase of market risks and credit risks.It's necessary for companies to understand the risks and use corporate bond financing wisely.This paper studies the influences of corporate bond financing to the corporate performance in China.This paper firstly analyzes relevant theoretical accomplishments and combs through the history of China's bond market and the corporate bond financing.The empirical model analysis of this paper takes 90 real estate enterprises which issued bonds during 2013 and 2015 as study object,adopting the method which combines quantitative analysis and qualitative analysis.In order to study the influences of corporate bond financing thoroughly,this paper sets three explanatory variables,relatively measuring the relative scale,absolute scale and the maturity structure of corporate bond financing.At last,this paper tries to come up with some policy suggestions based on the study results.The empirical model analysis results show that the correlation curve of bond financing ratio and corporate performance is U-shaped when the bond financing ratio is in(0,0.25),which is different from the theoretical model.The results also show that corporate performance is positively correlated with bond term to maturity.In other words,it's good for corporate performance to issue long-term corporate bonds.The reasons of the results is as below.Firstly,China's capital market is not mature enough.The theoretical assumptions of incentive mechanism and bond financing constrains are invalid.Secondly,the bond financing ratio of the sample in this paper is mostly in(0,0.15),which is so small that the advantages of bond financing can not be fully shown.Based on the result of the study,departments concerned should simplify the bond issue procedure,loosen up restrictions on bond types and maturity,and lower the cost of bond issue.Also,in order to increase the liquidity and efficiency of bond market,departments concerned should improve the credit rating system and encourage institutional investors to participate the market.