Indusrial Policy,Debt Financing And Business Performance

In recent years,industrial policy has been an effective means for the government to intervene in the economy,respond to market failures,and regulate the allocation of resources.The government can change the enterprise’s financing through the macro industrial policy,so as to affect the micro enterprise’s business activities.In view of this,this paper studies whether the government’s macro policies promote the improvement of the micro level firm’s performance and what role debt financing plays in it.This paper takes the introduction of the Revitalization Plan of Ten Industries in 2009 as the background,the relationship between industrial policy and business performance is analyzed thoroughly by combining theory and empirical research.Using the sample of the A shares listed companies in the 2008-2011 period of the Shanghai and Shenzhen Stock Exchange.Using difference-in-difference method to conduct how the Revitalization Plan of Ten Industries affect the performance of companies and debt financing,and consider whether debt financing has played an intermediary role in the impact of industrial policies on corporate performance.Furthermore,the heterogeneous impact of enterprises of different ownerships.After empirical analysis,the following conclusions as reached:1.After the implementation of the Revitalization Plan of Ten Industries,the results did not improve the performance of enterprises in the supported industries,but reduced the performance of the enterprises.This kind of influence is different among enterprises of different ownerships.Compared with non-state-owned enterprises,this negative effect is more obvious in state-owned enterprises.2.After the release of the "Revitalization Plan of Ten Industries,the companies in the test group received more debt financing and more short-term debt.The relationship between industrial policy and the scale of corporate debt financing and short-term debt is positive.The support of industrial policy is conducive to obtaining more debt financing and short-term debt.3.The enterprises in the test group received less long-term debt than the control group,and this effect was more pronounced in state-owned enterprises,which reduced the long-term liabilities more.4.After the Revitalization plan of Ten Industries,the enterprises in the test group played an intermediary role through two channels:short-term debt and long-term debt,which ultimately reduced corporate performance.