The Impact of State-owned Bank Loans on Corporate Working Capital Management：Evidence from China
Working capital management
|上傳時間: ||2018-08-02 16:14:54 (UTC+8)|
The mainland China market has the largest number of state-owned banks and state-owned enterprises in the world. Therefore, the decision-making of state-owned banks and the investment and operational decisions of borrowing companies are often affected by many factors that are not due to the maximization of corporate value and marketization. This paper examines the relationship between state-owned bank loans in China and the management of working capital of listed companies. First, state-owned bank loans have a significant positive correlation with the working capital of enterprises. Since debt financing can directly supplement the working capital needs of enterprises, state-owned bank loans without urgent repayment requirements cannot impose supervision and restrictions on the management of working capital of enterprises, and may further deteriorate the efficiency of enterprise working capital management. Second, we find that the nature of state-owned enterprises can improve working capital management, but because of its policy links with state-owned banks, it will further worsen the negative impact of bank loans on corporate working capital management. Third, cross-listed companies’ listing purposes are more likely to be obtaining more bank loans rather than of improving corporate governance, so the bank loans they have are still unable to effectively regulate their working capital management. But due to regulations from more information disclosure and related transactions, the policy-linked connection between state-owned enterprises and state-owned banks has led to further deterioration of their working capital management, which will no longer appear in cross-listed companies. Fourth, in terms of the impact of working capital on company value, our research validates previous literature and finds that an increase in working capital will significantly reduce corporate value.
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