Research On The Correlation Between Zero-leverage Strategy And Corporate Performance Of A-share Listed Companies In China

The company’s business development is closely related to its financing activities.Different financing methods and financing preferences will form different capital structures,which will have a significant impact on the corporate governance structure and corporate performance.In particular,the use of interest-bearing liabilities directly relates to the financial status of the company.The traditional capital structure theory believes that the rational use of interest-bearing liabilities can give full play to its tax shield effect,reduce agency costs arising from equity financing,and enhance corporate performance.However,in fact,many companies in the capital market have not adopted interest-bearing debt financing,and more than half of these companies will continue to adopt the zero-leverage strategy.At first,the thesis analyzes and compares the development status,capital structure and financial performance of zero-leverage companies and leveraged companies from the perspectives of time,industry,region,listing period,years of establishment,and sectors.The statistical results show that zero-leverage companies occupies a certain percentage in listed companies in China.,and it spreads across all walks of life.This shows that the zero-leverage capital structure is not a special phenomenon in China’s capital market and this situation deserves the attention of the academic community.In terms of its characteristics,zero-leverage companies are smaller in size relative to leveraged companies,have shorter establishment and listing periods,have more cash flow,higher retained earnings,and a better indicator of profitability.Then,the thesis takes the financial data of A-share listed companies from 2012 to 2015 as a sample,constructs a system of indicators through cluster analysis,and applies entropy and factor analysis to obtain a comprehensive evaluation score of corporate performance,and then through multiple regression analysis and logistic regression to analyze the interplay between corporate performance and the use of zero-leverage strategies.The study found that compared with leveraged companies,zero-leverage companies perform better;compared to state-owned enterprises,non-state-owned companies use zero-leverage strategies to have a greater impact on business performance;companies with better corporate performance tend to be more likely to use zero leverage strategy in the following year.Finally,based on the research results,this thesis puts forward some suggestions on the possible adverse effects of zero-leverage strategy,and points out that the company should use a zero-leverage strategy in a reasonable and appropriate manner and further improve its corporate governance structure.