Can Bond Financing Suppress Excessive Investment

Since 2005,China Securities Regulatory Commission launched a new round of financial market reform,one of the key reform is to vigorously develop China's bond market for our enterprises to open up new financing channels.Since 2007,China's bond market has launched a short-term financing bonds,corporate bonds and medium-term notes and other new debt financing tools,greatly enriched the financing of our enterprises,so that more enterprises can freely choose the most suitable way To finance,and thus greatly enhance the investment capacity of our enterprises and competitiveness.For investors,the bond financing also enriched their investment channels,supplemented China's capital market for a long time only through the stock,bonds and other investment in a short board,for investors to obtain greater investment income and more Good risk avoidance has better market conditions and policy conditions.Although for now,the overall size of corporate bonds,especially listed companies,financing and refinancing is still less than the equity financing and refinancing,but with the past decade,China's government,the SFC and related The bond financing has become a part of the financing structure of our country,and the bond market is also a big channel for the monetary policy of the People's Bank of China,besides the place of investment and financing as the enterprise and the investor,But also one of the important international market of RMB.In recent years,China's enterprises,especially listed companies,the most prominent problem is the excessive investment.According to Jensen(1986)free cash flow hypothesis,limiting the level of free cash flow,such as the distribution of dividends and debt financing,can significantly inhibit the level of excessive investment.And through debt financing,the introduction of creditors and external supervisory institutions to supervise corporate governance,has become a debt management mechanism.Domestic and foreign scholars have done a lot of research on the debt management mechanism,and from different angles,different methods to verify the debt management mechanism can really play the role of external governance.Whether the bond financing as the emerging financial instruments in China's capital market,whether the same external governance role,especially the over-investment of listed companies to suppress the role of this study is the focus.This paper first introduces the research background,and collates the relevant literature to explore and understand the problem,to explore the bond financing on the excessive investment inhibition of the theoretical clues.Then,based on the investment expectation model of Richardson(2006),this paper sets up the empirical model to establish the empirical regression model,and uses the listed companies listed on the A-share board and the GEM of China and Shanghai in 2014-2016 as the sample,The main purpose of this study is to explore the relationship between short-term financing bonds,corporate bonds and medium-term notes and over-investment in China's capital market,and to explore the relationship between the maturity structure of debt and the degree of market competition.influences.Through the empirical regression of the model,we find that the issuance of corporate bonds by private listed companies can significantly inhibit the over-investment level of listed companies,and the issuance of corporate bonds by state-controlled listed companies will significantly increase the over-investment level of listed companies.Short-term debt financing has a significant effect on the over-investment level of listed companies,while long-term debt financing will increase the over-investment level of listed companies.After considering the level of market competition,we found that when the market competition level is high,whether short-term debt or long-term debt can be listed on the company's excessive investment have a significant inhibitory effect.In this paper,the following suggestions are put forward:reduce the financing of private enterprise bonds,especially through the issuance of corporate bonds to raise the threshold of bond financing to improve the efficiency of the issuance of bonds,shorten the time of issuance of bonds,so that enterprises can timely,Effectively through the debt financing to obtain cash flow,thereby enhancing the enthusiasm of corporate bond financing.To strengthen the market function of state-owned enterprises,and gradually reduce its policy function.To enhance the degree of market competition,especially in the manufacturing sector,to encourage state-owned enterprises and private enterprises to compete fairly,win-win cooperation,learn from each other and common development.The innovations of this paper are:This paper uses the bond financing as the research entry point,selects the latest data from 2014 to 2016 as the data of the empirical research part,and chooses the manufacturing industry to return,combined with the state-owned and private holdings listed companies return Research innovation at the same time,but also to ensure the integrity of the results of empirical regression.