Case Study on Leveraged Financing Structure and Excessive Investment Activities in Domestic Listed Companies

摘要

In the circumstances of market economy, it seems fair to claim that debt is not just a financing instrument, but more importantly, an administrative instrument. Through the application of regression analysis, and taking all the A-stock listed companies on Chinaȁ9; s stock market during 2001 to 2006, it can be concluded that excessive investment activities exist in Chinaȁ9; s listed companies, and leveraged financing generally fails to demonstrate any restraining effect on excessive investment activities in such companies; it can be discovered through a further analysis in connection with the nature of ultimate control in such companies, that leveraged financing fails to demonstrate any restraining effect on excessive investment activities in state-holding companies, and it even aggravates excessive investment activities in the companies per contra, while leveraged financing does demonstrate a restraining effect on excessive investment activities in non-state-holding companies.