Research on the Impact of Local Public Debt on Enterprise Investment Structure

Abstract

The paper studies the impact of local public debt on the investment structure of enterprises. Specifically, this paper selects the local public debt data at the prefecture-level and the financial data of Shanghai and Shenzhen A-share listed companies from 2007 to 2015 as research samples. Based on the tax burden theory and financing constraint theory, using the fixed effect model of panel data, empirically tests the impact of local public debt on enterprise investment structure. The research shows that the expansion of local public debt will increase the investment in fixed assets of state-owned enterprises and decrease the investment in financial assets; the investment in fixed assets of private enterprises will decrease and the investment in financial assets will increase. Therefore, the impact of local public debt should be managed according to the classification of different enterprises.