The Influence Factors About Guaranteeing Behavior Of ST Listed Companies

Guaranteed loan, a favorite pattern of lending, plays an important role in the credit markets of China. As is known to all, an enterprise’s loan demand willbe easy satisfied by Banks and other financial institutions, if the company which has highly credit risk has the ability to get the guarantee of a listing Corporation withlow credit risk. Listing Corporation loan guarantees are very popular in secured loans. However, many research of the guarantee behavior of listed companies show that providing guarantee for other company will decrease the enterprise value. If the borrower defaults, the guaranteed have to repay the loan. When the contingent liabilities are converted to real debt, the guaranteed may led to financial reporting risk. ST listed companies, a special group in China securities market, actively participant in providing guarantee for other company. We all know, a basic feature of this kind of listing Corporation is the poor financial situation. Why the ST listed companies provide guarantee for others? Would Credit risk and shareholding structure affect the action of ST listed companies. Therefore, this paper tries to answer the above questions to explore the external guarantee behavior of ST listed companies.In this paper, we adopt the method of combining theoretical analysis and empirical analysis. On the one hand, we detailed analysis main factors about the external guarantee behavior of ST listed companies from the perspective of theory, such as Credit risk, equity structure, debt risk, operating status, the ability of mortgage, assets and so on. On the other hand, empirical analyses are made to inspect above judgment. Specifically, the empirical analysis contains two aspects. First of all, we search the relationship of above factors and the behavior of whether ST listed companies will provide guarantee to other company. Then, we choose the ST listed companies which have provide external guarantee to study the relationship of above factors and the guarantee degree of ST listed companies. At the same time, we have analyzed the various influence of the ST listed companies’ external guarantee for different ownership structure.Through theoretical and empirical analysis, we draw the following conclusion. Firstly, the external guarantee behaviors of ST listed companies are significantly influenced by credit risk level. The companies with low credit risk have a preference for providing guarantee to others, but the relationship between credit risk level and guarantee degree of ST listed companies is varies from the differences in ownership structure. Credit risk level and guarantee degree of ST listed companies have an increasing tendency in State owned enterprise. Secondly, the ownership structure affects the external guarantee behavior of ST listed companies. There is a negative relationship between ownership structure and the external guarantee behavior of ST listed companies. Under different ownership structures, other factors play different role in the ST listed companies’ external guarantee behavior. Thirdly, debt levels significantly influences the external guarantee behavior of ST listed companies. The more debt a company has, the highly guarantee degree the company will provide. Fourthly, operating conditions and the mortgage capacity have none influence to the ST listed companies’ external guarantee behavior. Fifthly, assets have a positive function with the choice of whether ST listed companies’ providing external guarantee, but there is a complex relationship between assets and the guarantee degree of ST listed companies. The relationship is significantly positive in state-owned nature, while the relationship is significantly negatively in state-owned nature.According to the above research results, this paper put forward the corresponding suggestions. Firstly, Banks and other financial institutions should focus on the establishment of the credit risk evaluation system, and prevent credit risk through timely and accurately identifying the guarantor and borrower credit risk. Secondly, the ST listed company that providing guarantee to others should perfect corporate governance and ownership structure adjustment to prevent big shareholders using external guarantee to hollow the listed company. Thirdly, the loan borrowers who need ST listed company providing guarantee to them need Weight the advantage and disadvantage of these choice’s costs and benefits. Fourthly, the regulatory agencies should also strengthen enterprise credit system construction, alleviate the problem of asymmetric information and optimize the environment of enterprise credit financing.