Research On The Influence Of Foreign Currency Debt On Enterprise Value Of Chinese Multinational Corporations Under The Background Of Wide Fluctuation Of Exchange Rate

After “The Belt and Road Initiative” proposed,more and more Chinese enterprises are going international.Coupled with the restriction of domestic financing conditions and the relaxation of capital control,foreign currency debt financing of domestic enterprises is becoming more and more common,and the scale of foreign currency debt of enterprises keeps expanding.At the same time,many times since 2005 revaluation makes from the unilateral appreciation to two-way wide fluctuation of RMB exchange rate,and from the exchange rate trend,which has strong sustainability,the expansion of the exchange rate fluctuations and sustainable has become the important influence factors of foreign currency debt behavior in enterprises,the exchange rate risks on the one hand can stimulate demand foreign currency debt,but on the other side It also increases the risk of using foreign currency debt.Therefore,in the context of wide fluctuations of RMB exchange rate,the huge scale of foreign currency debt of Chinese enterprises needs to be paid close attention to,and its financial consequences deserve in-depth study.Firstly,this paper reviews the literature and analyzes the motivation and demand changes of Chinese multinationals using foreign currency debt in the context of wide fluctuations of RMB exchange rate.Secondly,the paper analyzes the influence of foreign currency debt on enterprise value through two action paths: foreign exchange risk level and debt financing cost.Then,against the background of the further expansion of RMB exchange rate fluctuation after the reform of the exchange rate system on August 11,2015,this paper empirically tests the impact of foreign currency debt on enterprise value of Chinese multinational companies from2013 to 2019.Among them,the screening criteria for multinational companies are a-share listed companies whose ratio of overseas income to total operating income is greater than or equal to 10%.Therefore,the final research object of this paper is a-share listed companies whose ratio of overseas income to total operating income is greater than or equal to 10% and uses foreign currency debt.In addition,according to the trend of exchange rate fluctuations,the sample range is divided into two stages of low exchange rate fluctuations and overall appreciation(2013-2014)and wide exchange rate fluctuations and overall depreciation(2015-2019).Meanwhile,it compares and analyzes the impact of different types and currency structures of foreign currency debt on company value.And through the intermediary effect to test the internal mechanism of the influence of foreign currency debt on company value.Finally,considering that the existing literature uses export income or total overseas income to simply measure the foreign currency assets held by enterprises,the research conclusion is not convincing.This paper collects accurate data by manually searching the notes to the annual financial statements of enterprises,optimizes the measurement of foreign currency assets scale index of enterprises,and further explores what level of foreign currency debt scale of multinational companies will bring the highest value premium to enterprises.At the same time,considering the role of foreign exchange derivatives as an exchange rate risk management tool,the paper examines whether the use of foreign exchange derivatives can further promote the positive impact of foreign currency debt on enterprise value when multinational companies are in the optimal scale of foreign currency debt.The conclusions are as follows:(1)The increase of foreign currency debt can bring a premium of enterprise value.Moreover,the value premium of RMB exchange rate in the stage of wide fluctuation and overall depreciation is significantly greater than that in the stage of small fluctuation and overall appreciation.(2)The influence of foreign currency debt of trade type on enterprise value is greater than that of financing type.(3)Among the debts divided by currency,us dollar foreign debt plays a key role in enhancing enterprise value.(4)Foreign currency debt can improve enterprise value by hedging foreign exchange risk and reducing debt financing cost.(5)After further study,it is found that in the context of wide exchange rate fluctuations,when the total size of foreign currency debt is smaller than foreign currency assets,the higher the matching degree of foreign currency debt and foreign currency assets is,the higher the value premium brought by the use of foreign currency debt is,if foreign currency derivatives are used simultaneously,the company value can be further improved.