The Influence Of Social Capital On Corporate Finance Efficiency

The development of enterprises requires the support of funds.The existing external financing methods of enterprises in China mainly include bank loans,bond financing and equity financing.However,these traditional external financing methods can not fully meet the financing needs of enterprises.Financing difficulties and financing have become a major bottleneck restricting the sustainable development of enterprises.In this case,it is very necessary to study the complementary role of social capital as an informal way to corporate finance.Corporate social capital is a collection of various resources that an enterprise obtains from its social network in various ways.The financing efficiency can be measured by the ratio of financing income to financing cost.Social capital can affect the financing efficiency and financing benefits of enterprises through a wide-ranging network of relationships,social trust and social norms,which in turn affects the financing efficiency of enterprises.Especially in China,China has been a country that values cooperation and mutual trust since ancient times.The development of Chinese enterprises is also deeply influenced by Confucian culture with "Benevolence,Righteousness,Courtesy,Wisdom and Faith"as the core.The role of capital in improving the financing efficiency of Chinese companies is even more pronounced.This paper uses the case study method to take the capital-intensive Chenming paper industry as an example to explore the impact of corporate social capital on corporate financing efficiency,and provide some reference for other enterprises to improve financing efficiency and solve the problem of financing difficult financing.After research,this paper believes that rich social capital can act on the financing cost and financing income of the enterprise through the three paths of relationship network,social trust and social norms,thereby improving the financing efficiency of enterprises.First of all,from the perspective of financing costs,the close cooperation between Chenming Paper and banking financial institutions,financial shareholders and subsidiaries,and the high social recognition and social trust of Chenming Paper will help Chenming.The paper industry obtains low-interest financing,reduces negotiation and transaction costs in the financing process,thereby reducing the financing cost of Chenming Paper and improving the financing efficiency of Chenming Paper.Specifically,the close relationship between Chenming Paper and the bank helps Chenming Paper gain the trust of the bank,making it easier to reach strategic cooperation with banks,and obtain more banks with lower interest rates and less mortgages.Loans and credit lines reduce the cost of debt financing and improve financing efficiency.The close and extensive relationship between Chenming Paper and financial shareholders and subsidiaries helps companies to obtain low-interest financial support from these financial shareholders and subsidiaries.Credit guarantees reduce the financing cost of Chenming Paper and improve the efficiency of corporate financing;high social trust helps to improve the credit environment of Chenming Paper's social network and strengthen the positive impact of Chenming Paper's good reputation,based on Trusted social network financing can reduce the negotiation and transaction costs in the financing process of Chenming Paper and improve its financing efficiency.Secondly,from the perspective of financing income,the close relationship between Chenming Paper and the government will help Chenming Paper to understand various preferential policies in a timely and accurate manner,and at the same time better communicate its soft information to the government and obtain the government.Trust makes it easier to obtain government financing policy support,government grants,and tax incentives.Government subsidies constitute an income of the enterprise,and tax incentives help to reduce the tax cost of the enterprise,thereby increasing the net profit of the enterprise and increasing the return on assets of the enterprise,that is,increasing the financing income of the enterprise.Secondly,the good relationship between Chenming Paper and universities or other social organizations helps companies to obtain professional advice and more financing information from universities or social organizations,thus helping enterprises to formulate correct investment and financing strategies.The investment and financing strategy helps enterprises to improve the efficiency of capital use,obtain investment income that can make up the financing cost,and improve the financing efficiency of enterprises.In addition,social norms can effectively constrain the opportunistic behavior of Chenming Paper,reduce the underinvestment or excessive investment behavior of enterprises in the process of using funds,thereby improving the ability of enterprises to use the financing to create profits for enterprises and improve the use of corporate funds.Efficiency,which increases the financing income of the company.Finally,this paper makes a supplementary analysis of the financing risk of Chenming Paper.It finds that Chenming Paper has a high financing efficiency but its solvency is not high,and there is a certain financing risk.This paper believes that Chenming Paper should strengthen its attention to the solvency of enterprises in the follow-up financing process,and raise funds under a reasonable capital structure to avoid financial risks.Finally,this paper puts forward suggestions for other companies to learn how Chenming Paper uses social capital to improve the efficiency of corporate financing.