Empirical Studies Of Corporate Debt Financing Options

Chinese capital market has been growing for 20 years. Nowadays not only enterprises finance funds from it but also people invest in it. But the financial structure unbalance problem appears. When Chinese enterprises want to finance from outside, most of them will choose debt financing, and in debt financing, they prefer bank loan more than corporate bond. Therefore, studying what factors influenced Chinese enterprises'debt financing choice is a valuable and realistic subject.This article takes the enterprises which choose debt financing as object, and analyze the factors which influence the debt financing choice by the empirical and contrastive analysis, finally concludes some suggestions.First part is the literature summarize. We establish the theory foundation by sort out the theory about debt financing from five aspects: principal-agent theory, incomplete contract theory, information economics, and so on. Then we analyze five kinds of functional effect of debt financing in order to reveal the importance of debt financing for modern enterprises theoretically.Second we study factors influencing the choice of the enterprises'debt financing means, such as macroeconomic environment, cost of raising funds, information asymmetry and enterprises'characters. Studies have shown: (1) china is a developing country, and the financing structure is bank based model. The country condition makes the enterprises choose bank loan when debt financing; (2) the more corporate bond issues, the less financing cost takes. The enterprises should choose issuing corporate bond when financing huge funds; (3) issuing corporate bond is a good signal for capital market, and the stock price will raise, while the bank loan not; (4) the enterprises in monopolized or supervision industry with big scale, high net value, low debt ratio are more suitable for choosing corporate bonds. Different from the theory, Chinese enterprises which choose corporate bond have a low earning ability than those choosing bank loan.Therefore, we conclude several suggestions: (1) china should form an energetic, proper, gradual corporate bond market development policy, and establish a corporate bond market as a supplementary of bank loan market; (2) pick up the enterprises which have large asset scale, excellent performance, and good social reputation to issue corporate bond preferentially; (3) encourage the listed firms to issue corporate bonds to finance, in order to solve the financing structure unbalance problem; (4) reduce the government intervention to corporate bond market, and perfect the market policy and institution, in order to attract more and more enterprises to choose corporate bond.