Abstract
This paper studies the relationship between the financing structure and the probability of default of A-share listed companies from 2001 to 2020. The purpose is to prevent the occurrence of default and ensure the healthy development of various industries. It is found that the higher the proportion of external financing is, the higher the probability of default is. The impact of debt financing on default risk is higher than equity financing. In addition, this paper tests the mediating effect of cash flow risk, and the effect of financing structure on debt default probability is heterogeneous among regions and enterprises. These findings show that enterprises must control their financing structure, optimize the allocation of resources, prevent cash flow risk, reduce the probability of debt default, so as to make various industries flourish and optimize the industrial structure.
Highlights
Since the "11 super day debt" default event occurred in 2014, China's debt default events emerge in an endless stream, from the beginning concentrated in private enterprises, and gradually expanded to the whole body of enterprises
This paper extends the research object to corporate financing structure, and adds the data during the non-financial crisis to further study the impact of corporate financing structure on debt default probability
0.0376, which is significant at the 1% significance level, indicating that the debt equity financing ratio is positively correlated with the debt default probability, which verifies hypothesis 3
Summary
Since the "11 super day debt" default event occurred in 2014, China's debt default events emerge in an endless stream, from the beginning concentrated in private enterprises, and gradually expanded to the whole body of enterprises. According to the data released to the public, the amount of default involved by each default subject will exceed 100 billion yuan, and the scope of debt default events will be further expanded. The research less on the impact of corporate financing structure on debt default. Chiu [4] and other research results show that during the financial crisis, the default risk of enterprises relying on bank financing is higher than that of other enterprises. The results show that debt financing has an impact on the probability of default. This paper extends the research object to corporate financing structure, and adds the data during the non-financial crisis to further study the impact of corporate financing structure on debt default probability
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