The Effects Of Fiscal Policies And Fiscal Decentralization On Capital Structure Of State-owned Enterprises

The Chinese economy has experienced rapid growth over the past thirty years,while at the same time,both the government and the private sector have accumulated large-scale stock debt and the real-estate economy has become increasingly highly leveraged.This situation resulted from the over-reliance on credit because of the dependence upon investment for economic growth in the past,as well as the the response to the emergency measures taken during the international financial crisis.Nowadays,as the economy has shifted gear from the previous high speed to a medium-to-high speed growth,Chinese economy has entered a new normal.While the high leverage has become a serious problem that hinders the transformation of the pattern of economic development and the upgrading of the industrial structure at this stage,and the most worrisome problem is the rising corporate leverage,which concerns the stability of the entire financial system and the prospects for economic growth.Therefore,deleveraging has become an important part of supply-side structural reform.State-owned enterprises have always occupied an important position in the national economy.During the period of 2008-2009,along with the financial strength,state-owned enterprises were rapidly adding leverage in the related industries such as communications,public utilities,transportation,mining and nonferrous metals,while excessive counter-cyclical adjustment actually has increased supply,partly stimulated by consumption.However,when a large number of projects were completed without any incremental demand around 2010,the expansion of production capacity has become surplus,the prices of industrial products have fallen and the financial status of enterprises have gradually deteriorated.Some state-owned enterprises even have become zombie enterprises.Therefore,the deleveraging of state-owned enterprises has become the most important task of deleveraging.The premise of de-leveraging is to sort out the reasons for the high leverage of state-owned enterprises,that is,to clarify the reasons that affect the capital structure of state-owned enterprises.Capital structure theory is an important part of corporate finance.The modern theory of capital structure starts with Modigliani–Miller theorem and has been developed over the past few decades.Both theoretical explanations and empirical researches continue to deepen.Influencing factors of capital structure are one of the most important research directions.At present,the researches on the influencing factors of capital structure in international and domestic academic circles have gradually expanded from the micro-level to the macro-level,and the research methods have also shifted from static state to dynamic state,with a series of researches on the dynamic adjustment of capital structure.Past studies have found that the macroeconomic environment such as fiscal policy had an important impact on the capital structure of enterprises and also affected the speed of adjustment of the capital structure of enterprises.Considering that the state-owned enterprises in China occupy an important position in the national economy and bear a great deal of social responsibility and the local government under the fiscal decentralization system plays an important role in economic growth,so this article mainly discusses the reasons for the expansion of state-owned enterprises debt from the perspective of fiscal policy and fiscal decentralization at present.We hope to deepen our understanding of the current macroeconomic policy effects and the impact of fiscal decentralization and to provide a reference for government when it makes economic policies and implements deleveraging for the supply-side reforms.This paper chooses 384 listed state-owned enterprises from Shanghai and Shenzhen stock exchanges and regards corresponding balanced panel datasets as sample,which divided into two groups(one is composed of 111 central state-owned enterprises and another one is composed of 273 local state-owned enterprises.).The article empirically tests the impact of fiscal policy and fiscal decentralization on the capital structure of state-owned enterprises based on fixed effect model and partial adjustment model,and further compare the speed of capital structure adjustment between central state-owned enterprises and local state-owned enterprises.The study found that as for the factors affecting the capital structure,the decreasing of corporate income tax rate significantly reduced the leverage ratio of central and local state-owned enterprises.The growth of national fiscal spending and leverage ratio of central state-owned enterprises was significantly positively correlated.Local government spending growth and leverage ratio of local state-owned enterprises are significantly positively correlated,while the central government spending growth has no significant influence on the leverage ratio of local state-owned enterprises.And the capital structure adjustment rate of the local state-owned enterprises was slower than that of the central state-owned enterprises.