The Impact Of Non-Financial Enterprises Holding Financial Assets On The Leverage Ratio

The leverage ratio of non-financial enterprises has risen rapidly since the subprime mortgage crisis and is at a relatively high level.Excessive leverage may lead to the outbreak of corporate debt risks,which in turn affects the overall economic development.Therefore,de-leverage has always been one important part of the supply-side structural reform.Rational allocation of resources will help companies improve the efficiency of capital use and reduce leverage.In the context of the decline of the real economy,the financial and real estate industry's profit margins remain at a relatively high level,the proportion of non-financial enterprises deploying financial assets is getting higher and higher,and the resulting may be high profitability and high liquidity.The situation of leverage ratio has an impact,but there have been few related studies in the past literature,and the conclusions are inconsistent.Therefore,this paper aims to study the reiationship between financial assets heid by non-financial enterprises and corporate leverage,supplement the related research on the back-end impact of financial assets,and further analyze the adjustment effect of arbitrage motives on the relationship between the two,as well as property rights and regional grouping.The difference in the study enriches the perspective of research.This paper firstly combs and summarizes the relevant literature on financial assets and leverage ratio.On this basis,it analyzes the impact of holding financial assets on the leverage ratio of enterprises,and the adjustment of corporate arbitrage motives on both financial assets and leverage ratio.Finally combined with the structural characteristics of the leverage ratio,analyze the differences in property heterogeneity and regional heterogeneity.In the empirical research,this paper selects the data of China's A-stock non-financial listed companies in 2007-2018 as the research sample,introduces the financial assets into the target capital structure,and constructs the local adjustment model.The differential GMM is used for regression analysis.The research conclusions are mainly:1.Financial assets are significantly negatively correlated with corporate leverage.The more financial assets a company holds,the stronger the ability to realize future assets.The more benefits it receives,the less demand for debt financing and the lower leverage.2.The stronger the arbitrage motive,the smaller the negative impact of holding financial assets on leverage.For companies that hold financial assets for the purpose of cross-industry arbitrage,when they allocate financial assets,they have higher requirements on the rate of return,while ignoring the liquidity,and will not use the proceeds of financial assets for the main business of the enterprise.Under the strong arbitrage motive,the role of financial assets in reducing leverage has weakened.3.Among the state-owned enterprises,the negative correlation between financial assets and leverage ratio is stronger.In non-state-owned enterprises,the arbitrage motives have a significant weakening effect on the negative relationship between financial assets and leverage ratio.4.Among the enterprises in the eastern and central regions,the role of financial assets in reducing leverage is more obvious,and the adjustment effect of arbitrage motives to weaken the negative relationship between financial assets and leverage is only significant in eastern enterprises.Based on the above research conclusions,this paper puts forward relevant suggestions on deleveraging and risk prevention:pay attention to the level of holding financial assets,improve the risk management level of financial assets,and pay attention to the strength of corporate arbitrage motives and improve return on real assets investment,reduce the arbitrage motives of enterprises.Strengthen information disclosure and improve the management of flow of credit funds.Combine the nature of property rights and regional characteristics of enterprises,allocate resources rationally,and balance the development of each region.The innovations of this paper are mainly as follows:First,the arbitrage motive is selected as a moderator and the adjustment effect of the arbitrage motive in the influence of financial assets on leverage is studied.Starting from the internal perspective of arbitrage motivation,researching arbitrage motivation as a moderator variable that affects the relationship between financial assets and leverage ratios has enriched the research perspective.Secondly,based on the full sample study,this article takes into account the differences between different property rights and enterprises in different regions,and further analyzes the influence of financial assets on leverage ratio,making the research conclusions richer and more comprehensive.Of course,there are still some shortcomings in this paper,such as not adding non-listed companies to the sample,and not taking into account the adjustment of macroeconomic environmental factors as a research direction.In the past,there are few studies on the impact of holding financial assets on the leverage ratio of enterprises.This paper supplements the financial assets into the target capital structure model and constructs a partial adjustment model to study the relationship between financial assets and corporate leverage ratios from both theoretical and empirical aspects.This paper provides theoretical basis and policy recommendations for regulator to guide the enterprise investment decision-making and rationally allocates assets.Also it helps to prevent and resolve the risks of non-financial enterprises,and provides practical reference for realizing the healthy development of the real economy and deepening the supply-side structural reform.