The Research On Relationship Between Growth And Debt Financing Based On Small And Medium-sized Listed Companies In China

In the fierce competition, the enterprises persist in pursuing high growth for survival and development. High-speed growth stage for enterprises is an opportunity and a test. It is very important for enterprises in high-speed growth stage to optimize their capital structure and save their cost, while expanding the scale. Debt financing is not only an important way to obtain capital, but also restrict manages’ behaviors and reduce the chances of manages’ self-interested behaviors. However, banks are more willing to lend money to the large enterprises which are state-owned or transit from state-owned. Although small and medium-sized enterprises have made contributions to economic, they still can’t get the support of the bank for their operational risk and its management system. This situation makes the problem of shortage of funds more serious. So, small and medium-sized enterprises need to adapt to the situation, make best use of debt, and combine it with their own unique growth potential. Then they can maximize their value.Foreign theory and empirical research have shown that the growth of enterprises can make great influence on debt financing. However, it has not reached the same conclusion on the relationship between firm growth and debt financing. In recent years, scholars in our country have done a lot of research on this aspect, but also failed to come to the same conclusion. And a lot of research is mainly based on companies listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange. Research about small and medium-sized companies listed on the Shenzhen Stock Exchange is not much. Based on describing agency cost theory, signaling theory and strategic corporate finance theory, combined with existing research results, this paper makes some research in these aspects.Employing nonfinancial small and medium-sized listed companies before 2009 on the Shenzhen Stock Exchange between the year 2009 to 2012 as samples, and using nine indexes as the Growth’s substitution variables(capital accumulation fixed assets growth rate、growth rate of total assets、operating income growth rate、net profit growth rate、profit growth rate、operating profit growth rate、basic earnings per share growth rate、diluted earnings per share growth rate), this thesis investigates the relationship between growth and debt financing. Results show that the higher growth a corporate has, the lower debt it will hold, the higher the proportion of short-term debt to total debt will be, the higher the proportion of commercial credit to total debt will take and the lower the proportion of bank loan to total debt will take after controlling for firm size, asset-backed ability, current ratio, ratio of cash to income, non-debt tax, effective tax rate, regulated industry and year. In addition, this paper takes a sensitive test with the use of Tobin’s Q as the alternative variable of growth, and the empirical results also indicate that the growth is observably positively related to debt level, observably positively related to short-term debt, observably positively related to proportion of commercial credit in total debt and observably negatively related to the proportion of bank loan in total debt.