Analysis On The Influencing Factors Of Financial Leverage Ratio Of Listed Enterprises In China A Case Study Of Iron And Steel Industry

With the deepening of China’s economic restructuring,high-speed economic growth has become a new normal.The problem of excess capacity in the iron and steel industry has become more and more serious,resulting in excessive financial leverage,leading to a decline in the profit margin of the entire iron and steel industry.Due to soft budget constraints,a large number of iron and steel enterprises expand their capacity scale,and the problem of insufficient capacity utilization rate of iron and steel enterprises becomes more and more serious.In order to deal with the prominent contradiction of excessive financial leverage of enterprises,the state has formulated the important policy of "deleveraging".And "three go,one fall and one subsidy" as the primary task of economic work in the next few years.The steel industry is a typical representative of the cyclical industry.With the slowdown of economic growth,steel products consumption is insufficient,resulting in a large number of idle production capacity.Its debt interest cost and financial leverage rate rank the top five among industrial enterprises.The healthy development of the iron and steel industry is of great significance to the smooth operation of the national economy.With the continuous promotion of capacity removal in iron and steel enterprises,the return on investment of iron and steel enterprises has steadily rebounded,and the momentum of high financial leverage has been alleviated.However,much work still needs to be done to achieve a reasonable leverage rate.Therefore,it is necessary to continuously explore the current situation and influencing factors of high financial leverage in iron and steel industry.This paper combines financial theory with practical problems,combines empirical analysis and normative analysis,and through consulting relevant research results at home and abroad,summarizes and analyses the related research on financial leverage rate of iron and steel enterprises,and carries out this research on this basis.Starting from this study,this paper defines the related concepts of financial leverage ratio in iron and steel enterprises,and studies the classical theories such as capital structure theory,capital cost theory and pecking order financing theory related to financial leverage ratio in order to help the in-depth study of the problem.This paper defines the concept of financial leverage rate by introducing relevant theories,describes the current situation of leverage rate of listed iron and steel enterprises in China,and selects 18 representative listed iron and steel enterprises to study the financial leverage rate of listed iron and steel enterprises according to their size and ownership.In addition to the introduction of the current situation,the necessity of indebted operation of iron and steel enterprises is also analyzed in the light of the characteristics of the iron and steel industry itself.On the premise of the necessity of debt operation,this paper discusses how to judge the level of financial leverage ratio,and further gives the judgment basis.Finally,the paper points out the hazards of high financial leverage ratio and gives specific explanations.This paper analyses the causes of the high financial leverage rate of iron and steel enterprises,and points out that the main reason is the serious excess liquidity problem in China’s money market since the 2008 financial crisis.In addition,the iron and steel industry is a typical cyclical industry.The financial leverage ratio of iron and steel enterprises is counter-cyclical,and it often fluctuates counter-cyclically in the downturn of the economy.Moreover,the inadequate financing capacity of China’s capital market is also one of the reasons for the high financial leverage rate of iron and steel enterprises.Then,it makes an empirical study on the factors affecting the financial leverage ratio.Firstly,the basic research framework of this paper is constructed through relevant literature.Then,the paper analyses the influencing factors of financial leverage ratio in China’s iron and steel industry from macro and micro perspectives,combines the influencing factors with the previous theoretical analysis by using mathematical statistics method,and further uses panel data model to process the relevant information including both time factors and cross-sectional data,and demonstrates the influencing factors empirically: inflation.Expansion growth rate,M2 growth rate,market interest rate level,assets scale,liquidity ratio,profitability,growth and financial leverage rate of iron and steel enterprises are related.The empirical results show that the seven variables have different degrees of impact on financial leverage ratio,and the impact of asset size is the strongest.The other factors are profitability,liquidity ratio,corporate growth and inflation rate in turn.Finally,on the basis of empirical analysis,from the macro and micro level,the paper puts forward some policies and suggestions to solve the problem of excessive financial leverage.