Deviant Strategy,the Volatility Of Enterprise Performance And The Cost Of Debt

During the 2015 th central conference,Chinese president Xi Jing Ping put forward the concept of supply-side structural reform.To most firms in China,it's a challenge but also an opportunity.At the same time,debt has been the most significant way of financing.So that it's a crucial theme for firms to take advantage of their strategy to reduce the cost of debt if the reform.Using the sample of Chinese listed firms of 2009-2014,the article made research into the relationship of strategy deviance and the cost of debt.Our results indicat es that:(1)the greater deviance of the corporate strategy,the higher cost of debt;(2)this kind of effect is transmit through corporate performance,as greater deviance the corporate strategy,the corporate strategy tend to be more extreme,and thus cost of debt;(3)this kind of relationship tend out to be stronger in the corporations which are supported by the industrial policy.Our research contributed to the extant literature in three points: First,our research exposed deeply the relationship between strategy deviance and the cost of debt for the first time.Second,we fond that industrial policy to be the important factor of corporate strategy deviance,which enriched the literature of strategy deviance.Third,we extend the research of economic consequence of strategy deviance to the mediation effect of capital market.Last but not least,our research contributes to the practice of corporate finance,which provided the theoretical support for debt market reform,and also facilitated corporations for strategy choice.