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g the borrowing; the company should not always depend on increasing borrowing when appearing the shortage of funds while should decentralize the equity of the shareholders and improve the ability of making profits. For another, the proportion of the bank loans to bonds as well as the short-term and long-term borrowings of the company should be promoted in which the company may have a lower financial cost and a higher risk in the short-term borrowing while having a lower risk and a higher financial cost in the long-term borrowing.
To sum up, Jingxin Pharmaceutical CO. LTD as an empirical example should broaden more effective ways to finance funds and adopt a more rational debt financial structure in order to promote the firm performance and corporate value as well as boosting further development of the listed company in the SME board.
Keywords 关键词: increasing borrowing; firm performance; Jingxin Pharmaceutical; IPO

 

1. Introduction 简介

1.1 Background Information背景信息

Both debt financing and firm performance are the two critical issues in the theory and practice of the enterprise. From the broad perspective, the two issues should belong to the research field of modern finance, which not only has an important influence on the corporate performance but also on corporate value and management (Aghion and Bolton, 2002). A moderate increasing borrowing as an important part of debt financial structure is helpful to strengthen the firm’s management, standardize the firm’s behavior and improve the firm performance, affecting the overall development of the enterprise in the SME board (Jeffrey Zwiebel, 1996). Recently, experts and scholars in the financial field have been studying of the debt financial structure on Chinese listed companies in the SME board. As the largest developing country in the world, Chinese listed companies in the SME board have more choices on financing ways actually. According to relevant research on debt financing and firm performance as well as corporate value in the early stage, MM theory is put forward by Modigliani and Miller who have won the Nobel Prize in 1958, and then the revised MM theory is put forward, demonstrating the perfect capital structure is a debt rate of 100%. However, according to the bankruptcy theory, the enterprise must burden too much pressure on capital and interests, increase its financial risk and even create a bankruptcy cost. The fine solvency could be reflected to the public by debt financing, and then increase the corporate value (Prowse Stephen, 2000). According to the analysis above, it shows that the experts and scholars have almost noticed the different roles in different debt financings until in the 90s. That’s to say, the financial cost produced in different kinds of borrowings is also different researched by scholars, which have a further influence on firm performance. What’s more, the company with good firm performance tends to gain short-term borrowing while the company with bad firm performance tends to obtain long-term borrowing from the perspective of signal transmits theory (Titman & Wessels, 1999). Furthermore, the listed companies in the SME board have played an important role in the development of the society and economy in China since the Chinese government enforces the policy of reforming and opening. So in this paper the company named Jingxin Pharmaceutical CO. LTD is studied with a purpo本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。