Corporate Social Burden And Corporate Debt Financing: Evidence From The Private Enterprise In China

China is a populous country.Employment is one of the important responsibilities of government.It is the important foundation of state stability and economic development.If the employment problem cannot be solved,it will cause great negative influence to the society.On the other hand,the employment rate is one of the most important "barometers" that can reflect government performance.To solve the employment,governments at all levels will use a variety of administrative and economic means to influence the employ policy of enterprises.For enterprises,the excess of employees is enterprise’s main social burden.It will lead interests to decline.Previous research mainly focused on the economic consequences of social burden.It is generally believed that the enterprises bear the social burden will increase the cost and reduce the enterprise’s value.But there is little research on why companies bear social burdens.With the deepening reform of state-owned enterprises,enterprises gradually freed from the constraints of the government.This article will focus on the private enterprises that own highly autonomy,to find the reason of social burden.Over the years,private enterprises have the difficulties in financing,especially for the debt financing.For a long time,private enterprises have been more or less loan discriminations due to their small size,low credit and lack the necessary political support.It has become one of the main factors influencing its development.As we know,government holds the main domestic credit resources because major banks are state-owned.The government has a considerable influence on corporate debt financing arrangements.In this context,private enterprise that bears the social burden whether obtained the "privilege" of debt financing is a problem worthy of studying.Therefore,this article is from the angle of social burden and studies its impact on corporate debt financing.Firstly,this paper briefly summarizes the background of corporate social burden and debt financing,and expounds the significance and innovation points of the research.Secondly,reviews the previous relevant researches at home and abroad.Mainly reviews from two aspects: the economic consequences of social burden and the influence factors of debt financing.The third part is theoretical overview.First of all,we define concepts of the social burden、the proportion debt financing and the cost of debt financing,and then summarize the theoretical basis of full text research,mainly including the government intervention theory,stakeholder theory and the soft budget constraint theory.The fourth part is hypothesized.According to the soft budget constraint theory,the enterprises that bear the social burden can obtain the government’s financing support.Financing is a big problem for private enterprises,so private enterprises have the incentive to take the social burden in order to obtain the source of funds.Besides,government intervention theory suggests that the government has the ability to arrange loans and motivation to give more debt financing.Private companies have eased the government’s job-placement pressure,and the government may offer financial benefits.So we put forward the hypothesis 1 and hypothesis 2.We got a significant positive relationship with corporate social burden and the proportion of debt financing and a significant negative relationship with the cost of debt financing.On this basis,considering the economic development degree influence on enterprise social burden and debt financing,put forward the hypothesis 3 and hypothesis 4.In the higher level of economic development,positive relationship of social burden and the proportion of debt financing will drop and negative relationship of social burden and the cost of debt financing will drop too.After presenting the four hypotheses of this article,we did empirical test by using the collected samples of the private enterprises from 2008 to 2014.The research results that in the correlation tests and multiple regression analysis show social burden and the proportion of debt financing has significantly positive correlation,and significant negative correlation between social burden and the cost of debt financing.Further tests show that with the improvement of economic development level,positive relationship of social burden and the proportion of debt financing will drop and negative relationship of social burden and the cost of debt financing will drop too.According to these results,the government in the distribution of debt resources will consider enterprise social burden.So the exchange of interest exists between the enterprise and the government.But with the development of the market economy,the market will dominate the distribution of debt resources.It reduces the government intervention and leads more efficient resources into place.Finally,some policy suggestions are put forward in this paper.The first should be take charge of the resources allocation activities effectively,especially preventing local governments from discretionary resources for promoting performance.We should actively promote the construction of socialist market economy and improve the role of the market in resource allocation.In addition,the coordination of government governance and corporate governance should be strengthened.On the one hand,the government should improve the quality of employment and not simply emphasize the number of jobs.On the other hand,enterprises should recruit employees according to their own needs,because too much social burden will affect enterprise grandness.Reasonable corporate governance can promote the growth of the enterprise,thus fundamentally to create more employment opportunities.