Intellectual Property Protection and Corporate Debt Financing Costs: Evidence from Listed Companies in China
Keywords:
IPP, Debt financing cost, Information asymmetry, Moral hazardAbstract
The cost of capital is one of the key points of financial research. This paper introduces Intellectual Property Protection (hereinafter referred to as IPP) into the study of explaining the cost of capital, and empirically examine the impact of IPP on the cost of debt financing of enterprises invarious regions of China, based on the data of China’s Shanghai and Shenzhen A share market. The results indicate that:(1) IPP has a significant negative effect on enterprise debt financing cost;(2) through the grouping test based on the factor intensity of industry, it was found that the negative effect of IPP on debt financing cost in the sample of technology-intensive industries was more significant and negative than that of non-technology-intensive industries;(3) through the grouping test based on the ownership of firms, it was found that the negative effect of IPP on debt financing cost in the sample of non-state-owned enterprises was more significant and negative than that of state-owned enterprises(SOEs). Besides, IPP is not only conducive to the creation of enterprise value directly, but also adds value indirectly by reducing the cost of enterprise debt financing. This paper sheds light on the research into intellectual property system construction by linking law enforcement and enterprises’ micro financial behaviors, and it provides empirical evidence for this linkage. At the same time, the effect of industrial heteregeity and ownership also provide some practical implications by (1) tightening supervision over law enforcement, promoting the excise of administrative functions according to law, safeguarding judicial justice and raising the level of law enforcement so that IPP laws and regulations are strictly implemented;(2) speeding up the market-oriented reform of state-owned enterprises and encouraging market competition fairly.
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