The Impact Of Leverage Ratio On The Financial Leasing Options Of China’s Power Enterprises

In recent years,listed companies have been engaging in the financial leasing business more and more frequently,and this phenomenon is related to the interests of investors of listed companies as well as the development of the financial leasing industry.Through the analysis of China’s financial leasing transaction data,we can find that the majority of China’s financial leasing transaction mode is sale and leaseback,which is different from the Western countries,where the direct leasing mode accounts for a large proportion.Then what are the motives for China’s listed companies to finance by financial leasing mode;what is the information released to the outside world by China’s listed companies’ financial leasing decisions;how should China’s listed company investors,financial leasing practitioners,and regulators view and respond to the financial leasing behavior of listed companies?This paper conducts an empirical analysis of listed companies in China’s electric power industry to explore the influence of the asset-liability ratio of electric power industry enterprises on corporate finance leasing,i.e.,the mechanism of action,to provide strong evidence for enterprises to combine their advantages and flexibly use finance leasing to broaden financing channels,and also provide practical suggestions for the excellent development of the finance leasing industry.This paper selects listed companies in the electric power industry in Shanghai and Shenzhen from 2003 to 2020 for empirical analysis.The study finds that(1)an increase in the gearing ratio raises the degree of corporate finance leasing,as shown by the fact that for each percentage point increase in the gearing ratio,the degree of corporate finance leasing increases by 0.0536 percentage points.This conclusion still holds after robustness tests and instrumental variable regressions.(2)This paper tests the mechanism of the effect of gearing on financial leasing,and the study finds that financing constraints and debt default risk are the mechanisms of the effect of gearing on corporate financial leasing.(3)The heterogeneity analysis finds that the above factors affecting corporate finance leasing show prominent enterprise heterogeneity characteristics,and the role of gearing ratio in promoting finance leasing is more vital for state enterprises,large-scale enterprises,and after 2013.(4)Further analysis shows that the impact of gearing on finance leases is characterized by differences in the maturity structure of enterprises’ debt,and the effect of an increase in short-term gearing on finance leases is stronger.The analysis of the adjustment effect shows that the actual tax burden and debt maturity mismatch of enterprises will further aggravate the impact of gearing on corporate finance leases.Finally,based on the research findings,this paper puts forward corresponding policy recommendations from three aspects:macro,industry,and micro enterprises,to promote better the development of financial leasing in the electric power industry.