Analysis Of The Impact Of Charitable Donations From Listed Family Companies On Their Debt Financing Structure

Corporate charitable donations are regarded as an important part of corporate social responsibility.Especially after the launch of Charity Law of the People's Republic of China in March 2016,corporate legal persons have further realized that charitable donations have become an important way for companies to improve their social reputation,and charitable donations play an increasingly prominent role in narrowing the gap between rich and poor,promoting social equity and justice,and maintaining social harmony and stability.According to the statistics of the "2018 China Charity Donation Report",private enterprises donated about 450.32 billion yuan in 2018,which is still the main part of social donations,accounting for 50.55%of total corporate donations.At the same time,family companies,which account for a relatively large number of private enterprises,are increasingly playing a pivotal market role in job creation,GDP contribution and social impact.Enterprises actively making charitable donations provide a new perspective for solving debt financing problems.However,different from ordinary private companies,listed family companies have non-economic value goals and governance characteristics that non-family companies do not.Does the charity donation of the family business differ from the donation motive of the general business?At the same time,under the background that the term structure of debt financing of Chinese enterprises is generally short and the structure of debt financing is relatively simple,how does the charitable donation of the family business affect its debt financing structure?In this article,we mainly study the motivations of charitable donations of listed family companies and their impact on their debt financing structure(mainly referring to the debt maturity structure and layout structure).This article selects Zhejiang Longsheng,a representative family business,and uses case analysis method to discuss whether family companies with high charitable donation participation can obtain longer debt financing term and more kinds of layout structures.Based on the special corporate governance model and non-economic value of family companies,this article discusses the mechanism of charitable donations to the debt financing structure from four perspectives:social capital accumulation,family excess control power,the family company intergenerational inheritance and "green scarf" behavior.We found that charitable donations are more easily to accumulate family company social capital,such as the key access to government resources and bank relations;it can reduce the public's concerns about agency problems and low ratings of family companies under excessive control;it can affect the successor characteristics and give publicity to the family's spirits;it can effectively reduce the public's attention to the company's environmental issues and litigation issues.The above four functions enable the capital supplier to reduce the risk assessment of the expected return of the family business,reduce the information asymmetry between the information owner and the capital supplier within the enterprise or use the limited attention to transfer the unfavorable factors.And the family company will show a positive image to banks,non-financial institutions,the general public and other capital providers by the signal,which ultimately makes the family business enrich the debt arrangement structure through charitable donations and extend debt maturity structure,which ultimately makes the family business enrich the debt arrangement structure through charitable donations and extend debt maturity structure.Finally,based on the conclusions of the research,suggestions were made from the government level and the enterprise level respectively to improve the construction of the charitable rule of law,build a just political and commercial relationship,and closely integrate charitable donations with the strategy of company,which is helpful for inspiring family companies to participate in charitable donations voluntarily.And these suggestions can give full play to the significance of charitable donations to ease debt constraints and improve debt financing structure.