Research On The Motivation And Economic Consequence Of The Sangfor’s Choice Of Zero Leverage Policy

Target capital structure has always been an important topic in enterprise financial management.Under the classical theory of capital structure,it is believed that enterprises can make full use of the debt tax shield effect to achieve the optimal capital structure,minimize the cost of capital and maximize the value of enterprises by reasonably arranging the proportion of equity and liability.But with the development of Chinese economy,there are more and more zero-debt enterprises in the capital market,so the zero-leverage financial policy obviously contradicts the classic capital structure theory such as the revised MM theory and the order financing theory,which has aroused the wide research interest of domestic and foreign scholars.The existing literature mainly analyzes zero-leverage enterprises from the aspects of financial flexibility or financing constraints,management behavior or motivation through empirical research methods.Different from previous studies by scholars,this thesis adopts the method of case analysis,chooses Sangfor as the object of case study,explores the motivation for enterprises to adopt zero-leverage financial policy,and what economic consequences it produces.First of all,based on the agency theory,prioritized financing theory,tradeoff theory and signal transmission theory,this thesis uses the method of literature research to summarize the motivation,economic consequences and financial characteristics of zero-leverage enterprises in choosing financial policies,and defines the four concepts of zero-leverage,financial flexibility,innovation investment and investment efficiency.Secondly,on the premise of understanding the basic operation and financial situation of Sangfor,the motivation of its choice of zero-leverage financial policy is explored.This thesis first distinguishes the active choice from the non-passive choice,and analyzes whether the company has financing constraints from the three aspects of brand strength,product market share and debt guarantee ability,so as to determine whether it is a passive choice of zeroleverage financial policy.On the basis of excluding the passive choice motive,this thesis makes an in-depth analysis of its proactive zero-leverage financial policy,and finds that the reasons for the implementation of the zero-leverage financial policy can be divided into two categories:one is its ability to implement,that is,it has strong profitability and cash creation ability,which provides a guarantee for its sufficient endogenous financing;The investment of high R&D expenses of enterprises makes it possible for the "cash flow" effect under the non-debt tax shield and improves the endogenous financing rate of enterprises.In addition,sufficient equity financing of enterprises also facilitates the implementation of the zero-leverage policy.Second,in order to regulate financial flexibility and risk management,enterprises implement zero leverage financial policy.Then,based on the above content,it discusses the economic consequences of zero leverage financial policy.The results show that the zero leverage financial policy does not exacerbate agency conflicts and produce significant inefficient investment problems due to the lack of creditor supervision.On the contrary,zero-leverage financial policy improves the level of innovation performance of enterprises to a certain extent.But at the same time zero leverage financial policy also leads to higher cost of capital.Finally,based on the above analysis,the following conclusions are drawn: Sangfor’s choice of zero-leverage financial policy is less affected by the lack of creditor supervision;Zero leverage financial policy plays a certain role in regulating the financial flexibility of enterprises.To assist enterprises in R&D and innovation.For the above conclusions,the following two enlightenments are drawn: first,enterprises should consider the actual situation,reasonable control of the enterprise capital structure;Second,enterprises should combine their own characteristics,give full play to the positive effect of zero leverage financial policy.