Research on the Corresponding Relationship between Debt Financing and Corporate Performance in Listed Companies – Taking Hainan Airlines as an Example

Citation

Jiang, Yi De . (2017). Research on the corresponding relationship between debt financing and corporate performance in listed companies – Taking Hainan Airlines as an example. (Independent study, Master of Business Administration). Bangkok: Siam University.

Abstract

Listed companies to raise funds to meet the development of the company is a key link of the company’s operation,also the focus of research of corporate finance. Listed companies usually to raise funds in equity financing and debt financing. Different financing modes have different effects on the performance of the company, the same financing proportion of different level will have different effects on corporate performance,too. With the China’s capital market continue to improve and the development of marketization of interest rate, listed companies will decreasing the ratio of equity financing, gradually increasing the share of debt financing, part of the listed company has formed a high debt ratio. Debt financing will likely become the main way of financing, but the debt financing structure of listing Corporation has many problems and shortcomings,which affect the company’s performance. Therefore, it has realistic significance to research on the relationship between debt financing structure and corporate performance of listing Corporation. In this paper, the relationship between debt financing structure and corporate performance of listed companies as the research subject, the Hainan Airlines as the research object, by the case analysis mode to research the relationship between Hainan aviation debt financing and corporate performance.The overall debt ratio and debt maturity structure match of Hainan airline has something reasonable, and the debt is a single source of features, it has some similarities with majority of listed companies, so Hainan Airlines as the object of study is typical.

In this paper, the review of the related literature and western economics classical capital structure theory as the foundation, which as the research provides reference method and theoretical basis. Reference to related research, the Hainan Airlines debt financial capital structure is divided into: overall debt structure, debt maturity structure and debt source structure. Through comparative method, the Hainan Airlines debt status and performance status respectively compare with three major airlines,and the situation can be summarized as: overall debt ratio is high;debt maturity structure dominated by short-term debt;about the debt source structure,the bank loans is the main sources of debt financing; performance levels in the higher level compare with three major aviation. Next, Hainan aviation debt financing structure and corporate performance empirical research, three econometric model is designed on the basis of overall debt structure, debt maturity structure and debt source structure, the regression results such a conclusion: 1 the asset liability ratio of Hainan Airlines and firm performance significantly negatively correlated; 2 the short debt ratio of Hainan Airlines and corporate performance is negatively correlated,the long-term debt ratio and corporate performance is not slightly negative correlation; 3 the bank loan ratio of Hainan Airlines and the company performance significant negative correlation,the commercial credit ratio and the company performance is slightly negative correlation. Finally, take the current situation of Hainan Airlines as the basis, and combined with the related theory, analyzes the reasons about debt financing and corporate performance empirical results of Hainan Airlines , pointed out the existence of Hainan Airlines debt financing problems and something unreasonable, and put forward relevant suggestions for improvement, hoping to achieve the optimization of the debt financing structure of Hainan Airlines,and then improve the Hainan Airlines Company performance.

Keywords:  Listing Corporation, Debt Financing, Corporate Performance, Hainan Airlines.

Research on the Corresponding Relationship between Debt Financing and Corporate Performance in Listed Companies – Taking Hainan Airlines as an Example

International Master in Business Administration (IMBA), Siam University, Bangkok, Thailand