Is the Debt Default of Non-state-owned Firms Driven by Internal Factors？ From the Perspective of Short-term Loans for Long-term Investment and Diversification
LIU Haiming, BU Xiaoning
School of Finance, Shandong University of Finance and Economics
Summary:
In China, private enterprises occupy an important position. The Chinese government attaches great importance to the development of private enterprises and has introduced a series of measures including financial policies to encourage and support the development of private enterprises. In recent years, this development has encountered some difficulties, including frequent debt defaults. Between 2014 and 2021, bond market defaults became more frequent, with 339 corporate bonds in default, 74.6% of which were issued by private enterprises. This paper seeks to determine whether the main causes of private enterprises' debt default are internal factors or the external economic environment. Investigating this question has implications for how the government supports and guides private enterprises to overcome their difficulties, boost the economy, and achieve high-quality economic development. To test whether private firms' debt default is driven by internal or external factors, this paper analyzes the impact of two important corporate behaviors on private firms' debt default, i.e., short-term loans for long-term investment (abbreviated as “SFLI” hereafter) and diversification. These two perspectives are chosen for two reasons. First, SFLI and diversification are important corporate decision-making behaviors in China. Diversification and SFLI are prevalent among private firms and have an impact on their value and risk. Second, SFLI and diversification can consistently influence firms' debt default from a theoretical perspective. On the one hand, the debt default of private enterprises may be mainly driven by internal factors. Internal factors refer to private entrepreneurs focusing on their face and enterprises blindly chasing expansion, causing private enterprises to default on their debts. Under this hypothesis, important decisions made by entrepreneurs such as SFLI and diversification are irrational and will increase their debt default. On the other hand, private enterprises' debt default may be mainly driven by external factors, i.e., the macroeconomic and institutional environment may be the main factor driving firms' debt default. Under this hypothesis, SFLI and diversification are the results of rational management decisions and will not increase firms' debt default. Using a sample of Chinese listed private firms from 2003 to 2018, we find that both SFLI and diversification increase the likelihood of debt default for private firms, suggesting that internal factors or private entrepreneurs' own irrational decisions are the main cause of debt default. In terms of the transmission mechanism, SFLI and diversification lead to lower profitability, higher over-leverage, and higher agency costs, which in turn lead to debt default. In terms of heterogeneity, the credit crunch amplifies the effect of SFLI on private firms' debt default, while industrial support policies also increases this effect. Finally, diversification and SFLI by private enterprises do not always lead to default. This paper implies that in addition to guiding financial institutions to support private enterprises, given the cultural background and psychological characteristics of entrepreneurs, authorities should encourage private enterprises to implement high-quality development strategies to solve the debt default problem. The marginal contributions of this paper are as follows. First, it extends research on private enterprises' debt problems. Most studies analyze private firms' debt problems from the perspective of banks (Brandt and Li, 2003), whereas this paper analyzes these problems from the perspective of firms' decision-making. Other studies focus on the liquidity risk and monitoring effects of SFLI (Diamond, 2004; Bharath et al., 2008), whereas this paper analyzes how SFLI affects private firms' debt default. Finally, the paper adds evidence to firm diversification and supports the value discount of diversification (e.g. Rajan et al., 2000) by investigating private enterprises' debt default.
刘海明, 步晓宁. 民营企业债务违约是内因驱动吗？——基于短贷长投和多元化经营视角的分析[J]. 金融研究, 2022, 501(3): 79-95.
LIU Haiming, BU Xiaoning. Is the Debt Default of Non-state-owned Firms Driven by Internal Factors？ From the Perspective of Short-term Loans for Long-term Investment and Diversification. Journal of Financial Research, 2022, 501(3): 79-95.
[1]白俊和连立帅,2012,《信贷资金配置差异: 所有制歧视抑或禀赋差异？》,《管理世界》第6期,第30～42页。 [2]陈德球、刘经纬和董志勇,2013,《社会破产成本, 企业债务违约与信贷资金配置效率》,《金融研究》第11期,第68～81页。 [3]方军雄,2007,《所有制, 制度环境与信贷资金配置》,《经济研究》第12期,第82～92页。 [4]苟琴、黄益平和刘晓光,2014,《银行信贷配置真的存在所有制歧视吗？》,《管理世界》第1期,第16～26页。 [5]姜付秀、张敏和陆正飞,2009,《管理者过度自信, 企业扩张与财务困境》,《经济研究》第1期,第131～143页。 [6]林毅夫,2007,《潮涌现象与发展中国家宏观经济理论的重新构建》,《经济研究》第1期,第126～131页。 [7]林钟高、郑军和卜继栓,2015,《环境不确定性, 多元化经营与资本成本》,《会计研究》第2期,第36～43页。 [8]刘海明和曹廷求,2018,《续贷限制对微观企业的经济效应研究》,《经济研究》第4期,第108～121页。 [9]刘海明和李明明,2020,《货币政策对微观企业的经济效应再检验——基于贷款期限结构视角的研究》,《经济研究》第2期,第117～132页。 [10]刘晓光和刘元春,2019,《杠杆率,短债长用与企业表现》,《经济研究》第7期,第127～141页。 [11]柳建华,2009,《多元化投资, 代理问题与企业绩效》,《金融研究》第7期,第104～120页。 [12]陆正飞和韩非池,2013,《宏观经济政策如何影响公司现金持有的经济效应》,《管理世界》第6期,第43～60页。 [13]陆正飞、何捷和窦欢,2015,《谁更过度负债: 国有还是非国有企业？》,《经济研究》第12期,第54～67页。 [14]孟庆斌、侯粲然和鲁冰,2019,《企业创新与违约风险》,《世界经济》第10期,第169～192页。 [15]苏冬蔚,2005,《多元化经营与企业价值: 我国上市公司多元化溢价的实证分析》,《经济学 (季刊)》总第18期,第135～158页。 [16]王福胜和宋海旭,2012,《终极控制人, 多元化战略与现金持有水平》,《管理世界》第7期,第124～136页。 [17]杨威、赵仲匡和宋敏,2019,《多元化并购溢价与企业转型》,《金融研究》第5期,第115～131页。 [18]张纯和高吟,2010,《多元化经营与企业经营业绩——基于代理问题的分析》,《会计研究》第9期,第73～77页。 [19]钟凯、程小可和张伟华,2016,《货币政策适度水平与企业 “短贷长投” 之谜》,《管理世界》第3期,第87～98页。 [20]Almeida H., C. S. Kim, and H. B. Kim. 2015. “Internal Capital Markets in Business Groups: Evidence from the Asian Financial Crisis”, The Journal of Finance,70(6): 2539～2586. [21]Bharath S. T., J. Sunder, and S. V. Sunder. 2008. “Accounting Quality and Debt Contracting”, The Accounting Review,83(1): 1～28. [22]Brandt L., and H. Li. 2003. “Bank Discrimination in Transition Economies: Ideology, Information, or Incentives？” Journal of Comparative Economics, 31(3): 387～413. [23]Diamond D. W. 1991. “Debt Maturity Structure and Liquidity Risk”, The Quarterly Journal of Economics, 106(3): 709～737. [24]Fan J. P. H., S. Titman, and G. Twite. 2012. “An International Comparison of Capital Structure and Debt Maturity Choices”, Journal of Financial and Quantitative Analysis, 47(1): 23～56. [25]Jones S., and D. A. Hensher. 2004. “Predicting Firm Financial Distress: A Mixed Logit Model”, Accounting Review, 79(4):1011～1038. [26]Khanna T., and K. G. Palepu. 1997. “Why Focused Strategies may be Wrong for Emerging Markets”, Harvard Business Review, 75(4): 41～51. [27]Lang L. H. P., and R. M. Stulz. 1994. “Tobin's Q, Corporate Diversification, and Firm Performance”, Journal of Political Economy, 102(6): 1248～1280. [28]Li J., Y. Shan, G. Tian, and X. Hao. 2020. “Labor Cost, Government Intervention, and Corporate Innovation: Evidence from China”, Journal of Corporate Finance, 64(5): 101668. [29]Myers S. C. 1977. “Determinants of Corporate Borrowing” ,Journal of Financial Economics, 5(2): 147～175. [30]Rajan R., H. Servaes, and L. Zingales. 2000. “The Cost of Diversity: The Diversification Discount and Inefficient Investment”, The Journal of Finance, 55(1): 35～80. [31]Servaes H. 1996. “The Value of Diversification During the Conglomerate Merger Wave”, The Journal of Finance, 51(4): 1201～1225. [32]Stulz R. M. 1990. “Managerial Discretion and Optimal Financing Policies”, Journal of Financial Economics, 26(1): 3～27. [33]Zhou Q., K. J. K. Tan, R. Faff, and Y. Zhu. 2016. “Deviation from Target Capital Structure, Cost of Equity and Speed of Adjustment” ,Journal of Corporate Finance, 39(4): 99～120.
