The Impact of Financing Structure on Enterprise’ Overseas Direct Investment: A Case of A-share Listed Companies in China

Abstract

This research reviewed relevant literature and theories to analyze the influence of financing structure on enterprises' overseas direct investment and its influence mechanism. The panel data of 1,725 Chinese A-share listed companies from 2000 to 2020 was used. The debt-to-equity ratio index was used to measure the corporate financing structure, and the model was established combining the control variables at the enterprise level. The Probit model was used for benchmark regression, and the Logit and negative binomial panel model were used for robustness tests. At the same time, the influence mechanism was analyzed from the perspective of enterprise innovation research and development and productivity, as well as the heterogeneity analysis and endogeneity test. The conclusion is as follows: (1) The financing structure affected the overseas direct investment of enterprises. The high proportion of equity financing in the financing structure of enterprises was conducive to the generation of overseas investment projects and the increase in scale (2) The financing structure affected the overseas direct investment of enterprises through innovation, research and development, and productivity of enterprises. (3) According to the results of industry heterogeneity, the financing structure of manufacturing enterprises did not have a significant impact on their overseas direct investment.