Can Bank-related CFOs Give Companies A Funding Edge?

At present,China is in the period of economic transformation,the market is developing rapidly,and enterprises are also facing many competitive pressures in the development of various aspects.In order to achieve rapid development and stand out in the industry,enterprises need a large amount of capital to meet their operational and investment requirements.Considering the forms of enterprise financing existing in this market,the debt financing market has gradually grown and become an important and efficient way for enterprises to finance.Enterprises can fill their capital gap in the way of bank loans and other forms to achieve better development of enterprises.China’s "relationship" culture has a certain impact on the development of enterprises,among which,"relationship" financing is a form of "relationship" culture.Many scholars have found that by hiring certain employee with banking experience as a senior executive,the enterprise can obtain the resource advantage,management advantage and information advantage needed for financing,so as to help the enterprise to obtain lower financing cost and more financing volume in the approval of bank credit.By sorting out existing literatures,this paper finds that the study objects of most current research are senior executives of listed companies,and many scholars have analyzed the relationship between the bank association of senior executives and corporate debt financing,but few scholars pay attention to the research on the association of specific senior executives with Banks.In view of the important role of CFO in corporate financing,this paper mainly studies the relationship between CFO’s bank association and corporate debt financing.The compensation incentive mechanism has been improved in recent years,which is one of the fields that scholars have focused on.Principal-agent theory holds that the increase of remuneration can maintain the consistency of the interests of principals and agents.The CFO has an absolute advantage in financial information in the enterprise.In order to reduce the CFO manipulation of the self-interest motive of accounting information,and make its full potential in the process of bank credit bank associated advantages,also keep consistency of CFO’s interests and the value of the enterprise,this article will use CFO compensation incentive as a moderator variable,and study the impact of CFO salary incentive on the relationship between CFO with bank association and enterprise credit financing.Based on relevant debt financing theories,this paper respectively studies three issues:whether CFO’s bank association can bring financing advantages to enterprises,the impact of CFO’s different bank affiliation levels on corporate bank borrowing,and the impact of salary incentive measures on CFO’s relationship with debt financing.In the further research,this paper divides the debt maturity into long term and short term debt borrowings,and studies the impact of CFO’s bank relationship on the loan maturity of Banks respectively.In addition,based on the property right nature,this paper discusses what kind of enterprises are more in need of CFO with bank connection and whether CFO’s bank connection can significantly reduce the debt financing cost in addition to the impact on financing volume.This paper adopts the method of combining theoretical analysis and empirical test,and selects Chinese a-share listed companies from 2010 to 2017 as samples to study the hypothesis.The research findings are as follows:(1)Under the full sample analysis,the bank-related CFO has a significant positive impact on the increase of corporate bank borrowing;(2)The sample with bank connection of CFO was selected for research,and it was found that the bank level of CFO had a positive and significant impact on the amount of corporate bank loan.(3)Taking CFO’s salary incentive as the moderating variable,the study found that the salary incentive has a significant positive impact on CFO’s bank association and debt financing,this result indicates that the greater CFO’s salary incentive is,the more its bank association can help enterprises to obtain financing advantages.(4)this paper studies the relationship between bank-related CFO and bank loan term,and finds that bank-related CFO has a significant positive impact on long-term loan increment and short-term loan increment of enterprises.This paper takes the property right nature of enterprises as a moderating variable and finds that the property right nature has a negative and significant impact on CFO’s bank association and debt financing.Compared with state-owned enterprises,CFO with bank connection in private enterprises can help enterprises gain more financing advantages.In addition,this paper finds that CFO’s financing advantages are not only reflected in the amount of bank borrowing,but also can help enterprises reduce financing costs.This paper mainly studies the impact of CFO’s bank association on corporate debt financing,and subdivides CFO’s bank association level,which has a certain positive meaning for enterprises to obtain debt financing,and solve the problem of financing difficulty.