A Study On Financing Efficiency Of Listed Small And Medium-Manufacturing Enterprises Listing

The financial crisis began from U.S in 2008 throughout the world, which took a terrible beating to small and medium enterprises (SMEs) in China. According to the statistics from the relevant departments, more than 67,000 Chinese SMEs bankrupted in the first half of the year 2008. The difficulties faced by SMEs under the deteriorating environment of domestic and international economy come mainly from such three aspects as the disruption of international trade, aggregating financial difficulties and increasing production costs. So far, the proportion of Chinese SMEs loans only rank 10%of total bank loans, and about 4/5 SMEs the liquidity of SMEs cannot obtain enough liquid funds for running their business.The main form of equity financing for SMEs is to be listed on the Shenzhen SMEs Board. Up to April 23,2010, totally 395 SMEs are listed on the Shenzhen SMEs Board,295 of which are manufacturing companies, accounting for 76.67%. Based on the above situation, in this paper, a study on financial efficiency of corporations is carried out on the basis of manufacturing SMEs on the Shenzhen SMEs Board, and the purpose of this study is to explore solutions to the financing problem of SMEs in China.Based on the theories of the financing structure, financing and capital structure and efficiency measurement in theoretical system of financial management, both quantitative and qualitative analysis are used in this paper. The paper firstly discusses the factors impacting the financial efficiency of Small and medium manufacturing enterprises, upon which the input and output variables in Data Envelopment Analysis (DEA) model are determined. Moreover DEA method is applied to carry out an empirical study on financing efficiency of manufacturing SMEs which are listed. Finally, conclusions are made with respective to technology efficiency, pure technical efficiency, scale efficiency, returns to scale of the financial efficiency, the improvement direction of financial efficiency and so on. The main conclusions are as follows:First, the financial inefficiency of manufacturing SMEs on Shenzhen SME Board is low. Through the analysis of 292 SMEs, empirical findings of this paper show that the majority of listed manufacturing SMEs are lack of efficiency obviously with the average technical efficiency 0.273, the average pure technical efficiency 0.376, and the average scale efficiency 0.789.Second, the sort of the financial efficiency of manufacturing SMEs is consistent with that of sub-sectors. In order to improve the credibility of research findings, the sub-sectors within the DEA efficiency ranking are carried out in the sub-industry which meets the requirements of DEA. The conclusion is that there is no change in relationship between the sample companies although the values of the financial efficiency of enterprises within the sub-sectors are higher, which proves that the ordering based on DEA method is credible.Third, the financial efficiency of listed manufacturing SMEs is impacted by regional disparity, but it is uncorrelated to the numbers of listed manufacturers in this region. In details, in terms of financing efficiency, Tibet, Chongqing and Shanxi provinces ranked the top three, whereas Guangdong, Jiangsu, Shandong, Zhejiang provinces in which there are Large number of listed SMEs ranked sixth, eighth, ninth and 13 th respectively.Fourth, financial efficiency of listed manufacturing SMEs is related to their listing time. From 2004 to 2010, the financial efficiency of listed manufacturing SMEs represents a U-shape, the value of efficiency first decreased and then increased, and the financial efficiency in 2010 is higher than that in2004.Fifth, the financial efficiency could be improved by adjusting financing size of listed manufacturing SMEs. The empirical results show that not being at an optimal scale of return is partly responsible for the low financial efficiency of listed manufacturing SMEs. Thus, the improvement of corporate financial efficiency can be achieved by adjusting financing size. For example, the financial efficiency of corporate will be improved either by expanding the financing size when the firms are at the stage of increasing return to scale or by reducing the financing size when they at the stage of decreasing return to scale.This paper provides with two possible innovations:Firstly, according to our knowledge, this paper is the first study of applying DEA efficiency evaluation method to the analysis of the financial efficiency of listed manufacturing SMEs on the Shenzhen SME Board. Though there are a large number of studies about the financial efficiency problems of listed enterprises, few is focusing on the financial efficiency of listed manufacturing SMEs. Empirical findings show that the DEA efficiency measurement method is proper for financing efficiency evaluation of listed manufacturing SMEs.Secondly, this paper renews the input-output variables of DEA efficiency evaluation for listed manufacturing SMEs. The selected input variables including three financial indicators, Total Value of Assets, Asset-debt Ratio and the Main Business Cost, and the output variable is five containing Net profit, the Main Business Revenue Growth Rate, Total Asset Turnover, Flow Rates and Earnings per Share.