Research On The Motivation Of The Zero-leverage Behavior Of Chinese Listed Companies

The research of capital structure theory and its empirical analysis has been one of the core contents of modern corporate finance.Classical theories of capital structure like Trade-off theory and Agency cost theory believe that a company always has the best capital structure.The debt financing can not only satisfy the capital demand of the companies,but also has the advantages of realizing the income of tax shield,reducing the agency cost and so on.Therefore,moderate liabilities can enhance the value of companies and bring benefits to shareholders.However,in reality,many companies do not use or rarely use debt financing,and this phenomenon has shown a growing trend in the capital market both at home and abroad.Under the background of the discrepancy between reality and classical theories of capital structure,zero-leverage phenomenon has gradually attracted the attention and research of scholars.On the basis of the existing research,this thesis studies the reasons for the choice of zero-leverage policy of Listed Companies in combination with the macro economic situation and the characteristics of the capital market.We take companies that issued A-shares in Shanghai and Shenzhen stock market from the year 2000 to 2016 as analysis samples,and analyze the zero-leverage behavior of these listed companies.It is found that the number of zero-leverage companies is increasing,and its size and age have obvious distribution characteristics,which shows that it has practical significance to study the motivation of zero-leverage behavior of Listed Companies in China.Then,we make statistics and comparative analysis of these sample firms in both aspects of financial and governance characteristics.We find that the level of cash flow,profitability,growth opportunities and dividend payout ratio of zero-leverage companies is higher than that of leverage companies,besides,its board size is smaller,its proportion of independent directors is lower,and its CEO has more shares.On the basis of the previous study,we put forward four assumptions about the motivation from the perspective of the enterprise’s own characteristics and the external environment: corporate governance,external financing needs,financing constraints and macroeconomic conditions.We carry out multiple Logit regression analysis about the relationship between zero-leverage behavior and corresponding explanatory variables.The research shows that the governance characteristics of a company will affect its choice of zero-leverage policy,and the company is more likely to choose the-zero leverage policy when the ownership concentration is higher,the size of the board is smaller,the board is less independent,or the CEO has more shares.In terms of financial characteristics,the company is more likely to choose zero-leverage policy when there is less demand for external financing,or the size and the age of the company is smaller.In the aspect of macro economy,it is found that listed companies are more likely to choose zero-leverage policy when the macro economy is depressing.The result of the study shows that the reasons why Chinese listed companies choose zero-leverage policy are from two aspects: their own characteristics and the external environment.At last,we putforward some policy recommendations for the market,companies and investors according to the conclusion of the study.