Research On The Motivation Of Special Purpose Vehicle Establishment

Special Purpose Vehicle(SPV,also known as Special Purpose Entity)originated in 1970s in America,providing enterprise a new channel of financing.In 1990s,financing demand urged with the prosperous development of economics and thus SPV trend blew up,with which,associated problems came along.Due to the specialty,complexity of inner mechanism and high freedom to manipulate,issues around SPV's abuse and supervision are emerging.A once edged sword for financing became double-edged now.So,investigating and validating the real motivation of enterprise to establish SPV would not only fill the blank in the field of research on establish behavior,but help regulators make policies granting small enterprises more opportunities and directing them develop healthily as well.As for research data,'Red Chip' enterprises are the study object in empirical analysis.'Red Chip' is the very representatives of those in mainland China,and both of them share a lot of similarities.So research on 'Red Chip' would work effectively and the result shall be applied to enterprises in mainland China.The research starts with demands,for motivation derives from demands.Consulting and summarizing existing essays,this essay hypothesizes that there are three primary driven factors,financing,tax-avoidance,and financial management.Financing factor is referred as the financing demands using abs(asset-backed securities)through SPV.Tax-avoidance represents the demands of tax burden reduction using SPV's founded in 'Tax heaven' feature.And financial management factor is the demands of off balance-sheet financing and misguidance to debt investors.Based on the hypothesis,a Tobit empirical regression model is set up and the empirical analysis is carried out.The result shows that,in terms of sample of all industries,financing and financial management factors have significant influence on establish behavior.In contrast,tax-avoidance factor's effect differentiates from industry,that enterprises with high profit rate and taxation rate are more likely to set up SPVs motivated by this factor.The control variables size,span and popularity of SPV use in industry,are significant as well.Large scale promises a enterprise sufficient knowledge and fund,popularity providing enterprises in the same industry with valuable experience,both of which motivate the behavior of SPV establishment.Span somehow has mutual effect with factors.Specifically speaking,the increase of span suppresses financing factor whereas stimulates financial management.For the above-mentioned result,this essay makes proposal to both enterprises and departments affiliated and with the guidance and appropriate regulation,the rights of investor and the development of enterprises are guaranteed.This essay is the first to focus on behavior with multi-motivations and thus the author has made two innovations.First,to investigate more driven factors on SPV establishment thoroughly,knowledge of other relevant subjects and the latest data at micro level are applied.Second,to obtain SPV data for the empirical model,a method of identifying SPV according to China's condition is proposed.However,because of the availability of SPV data,cross-sectional data rather than panel is used in the process of empirical analysis.Despite of the robustness test,mutual casual effect between years is still unsolved,which requires further work to improve.