I. Introduction

The influence of financial leverage on company value and growth is a major research field of capital structure theory. The growth of the company is a common concern of the company's operators and investors. The growth of the company needs a lot of funds as support. Companies can achieve sustained and stable growth with the help of financial leverage. It is very important to study the relationship between financial leverage and company growth for the development of enterprises in China. The research on the relationship between them is still a hot topic for theoretical and practical workers. By reviewing the relationship between them, we can find out the advantages and disadvantages of their research, and provide some reference and enlightenment for better studying the relationship between them in the future.

Two. Overview of foreign research status

Foreign scholars have done a lot of research on the influence of financial leverage on company growth. In 1934, Graham pointed out that the speculative capital structure (high asset-liability ratio) enjoys tax-free treatment because of debt financing, which is conducive to the common stock to obtain a lot of benefits from the expansion of the company's property and income, and is conducive to the company's high growth. Miles company. Turnbull (1977) believes that when the company's debt ratio is high, its bankruptcy risk will increase accordingly, and once it goes bankrupt, it will completely lose its growth opportunities. Therefore, when the company has more growth opportunities, it will adopt a more conservative financial leverage policy, so the predicted growth opportunities have a negative correlation with the debt ratio.

Smith and Warner (1979) once pointed out that when a company uses debt financing, it will cause debt agency problems, one of which is insufficient investment. Myers believes that the company will only accept investment plans in which the net present value of cash flow generated by investment projects exceeds the sum of debt interest and investment denomination. However, it will abandon the investment scheme that the net present value of cash flow is greater than the investment denomination but less than the sum of debt interest and investment denomination, which leads to the problem of insufficient investment, indicating that the company's financial leverage will slow down the company's growth.

Titman & ampWessels thinks that companies in the growth stage have more choices for future investment opportunities, but because of the debt agency problem, they speculate that the debt ratio should be inversely proportional to the company's growth. However, the empirical results show that the inverse relationship between debt ratio and growth is not significant.

Larry Lang and others have shown in their research on leverage, investment and company growth that leverage will not slow down the growth of companies with good investment opportunities; However, when the company's growth opportunities are not recognized by the capital market or the value of its growth opportunities is not enough to overcome the impact of risks and costs caused by high debt, financial leverage is negatively related to the company's growth.

Three. Domestic research status

(A) financial leverage is negatively correlated with the company's growth

Wu Shinong, Changqing Li and Yu Wei (1999) selected five key factors that affect the growth of listed companies-asset turnover rate, gross sales margin, debt ratio, growth rate of main business income and period expense rate, and established a judgment model for the growth of listed companies. Their research results show that the judgment model composed of the above five variables can effectively judge or predict the growth of listed companies in China. In addition, the results of the judgment model show that the debt ratio is negatively related to the growth of the company.

The empirical analysis of 26 manufacturing companies by Bi Wanxia and Xu Wenwen (2005) shows that the comprehensive value indicators based on return on net assets, growth rate of main business, growth rate of total assets and price-to-book ratio are negatively correlated with asset-liability ratio.

Xiao Zuoping (2005) noticed that financial leverage has a significant negative impact on corporate performance by investigating the relationship between capital structure and corporate performance.

(B) The relationship between financial leverage and company growth is not significant.

Lu and Xinyu (1998) made an empirical study on the main factors affecting the capital structure of listed companies. In this paper, they put forward the hypothesis that growth is positively related to capital structure. They believe that companies with strong growth often have good future development prospects, so they are usually reluctant to issue too many new shares to avoid dispersing the control of old shareholders and diluting earnings per share, so they can only raise funds needed for investment projects by increasing liabilities. However, their empirical results show that there is no significant relationship between growth and debt ratio.

Hong Xixi and Shen Yifeng (2000) used the theoretical framework of the school of determinants of capital structure to make an empirical study on the main factors affecting the financial leverage of listed companies in China. The results show that there is no significant relationship between corporate growth and corporate financial leverage.

(C) financial leverage is positively related to company growth

Lv Changjiang and Wang Kemin (2002) studied the interaction mechanism among financial leverage, dividend distribution and management shareholding ratio of listed companies in China. Empirical research shows that the financial leverage of listed companies is positively correlated with the company's performance and growth. This shows that excellent companies that are in the growth stage and gradually expand their assets are good at exerting the financial leverage effect, improving the efficiency of the use of company funds and reducing the cost of equity agency.

Wang Hui (2003) observed the positive impact of corporate debt on corporate value. The research shows that the debt level of the company has a significant positive explanatory power to Q value, P/B ratio and ROE (but this influence is not significant for a few companies with very high asset-liability ratio).

Lv Changjiang, Jin Chao and Chen Ying (2006) studied the influence of financial leverage on the growth of listed companies under different operating performance conditions. The results show that the influence of financial leverage on the growth of listed companies is different from the existing research results at home and abroad. For companies with excellent performance, financial leverage plays a positive role, and debt management can promote the growth of the company. Moreover, with the enhancement of the company's performance, the positive role of financial leverage is more significant; For companies with poor performance, financial leverage has a negative effect, which has a certain inhibitory effect on growth.

Four. Summary of research status at home and abroad

A considerable number of foreign scholars have studied the theory of capital structure and the role of financial leverage, but there are also quite a few problems that have not been further empirical studied, and many problems have not yet been finalized. At present, there are two main problems: first, although we know that the financial risk brought by high debt will lead to the loss of creditors' value and limit the ability of enterprises to use financial leverage, we still can't reasonably separate water from risks and find the best point of capital structure in reality. Secondly, the existing theory can not correctly provide the amount and duration of corporate financing in different environments, and the main obstacle is the difficulty of corporate debt risk assessment.

At present, the domestic research mainly focuses on the debt situation of enterprises and its impact on the macro-economy, as well as the countermeasures to solve the debt. There are not many papers that systematically study the relationship between capital structure and growth of listed companies in China through empirical research.

From the domestic and foreign scholars' research on the relationship between financial leverage and company growth, we can see that different variables are selected to measure company growth, and the research samples and methods are also different, which affects the credibility of the research results to varying degrees and leads to inconsistent research results. And this study mostly takes the financial performance index of the company as the evaluation index of the company's performance. Financial indicators can not reflect the impact of risk structure (especially the financial risk caused by corporate liabilities), and may lose objectivity and authenticity because of earnings management of corporate management authorities. In addition, some studies choose too few samples or lack industry representation. In addition, some studies failed to control other specific factors (such as enterprise scale, asset structure, ownership structure and industry attributes) that affect company performance. The defects of these research methods affect the reliability of measurement results to varying degrees.