2020 2nd International Conference on Economic Management and Model Engineering (ICEMME)
Multiple Regression Model Analysis of Financing
2020 2nd International Conference on Economic Management and Model Engineering (ICEMME) | 978-1-7281-9144-7/20/$31.00 ©2020 IEEE | DOI: 10.1109/ICEMME51517.2020.00038
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Methods and Influencing Factors
Based on Infrastructure Construction Industry
Li Jiawei
Beijing Jiaotong University
Beijing, China
474841006@qq.com
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Each enterprise has its own life cycle. The theory believes
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Keywords-component; financing methods; financing costs;
influencing factors; multivariable linear regression model
I. RESEARCH BACKGROUND
Funds are critical to the growth and expansion of
enterprises. Enterprises without financial support cannot make
a smooth turnover, and enterprises lacking funds cannot gain
the upper hand in the competition. Therefore, capital is the life
and soul of an enterprise for an enterprise. From the perspective
of how Chinese enterprises obtain funds, the main form is to
raise funds from banks or other financial institutions. Bank
loans are one of the most common methods for enterprises to
obtain funds. However, this method of obtaining funds is not
free and requires a certain amount of payment. cost. Therefore,
companies should conduct comprehensive comparative
analysis when choosing financing methods.
Under the current situation, in order to obtain more
resources, it has become a trend for enterprises to choose to go
public to obtain more funds for development. There are more
and more ways for companies to go on the market for financing,
and more and more factors influencing financing are becoming
more and more complicated, and there are many problems that
follow. Therefore, it is of great significance to study the
financing of listed companies. It is necessary to analyze the
current data of various industries by using various model
methods, analyze the problems according to the current
situation, and put forward some solutions.
978-1-7281-9144-7/20/$31.00 ©2020 IEEE
DOI 10.1109/ICEMME51517.2020.00038
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II. THEORETICAL BASIS
A. Credit Rationing Theory
Commercial banks are very concerned about interests.
Driven by interests, commercial banks cannot guarantee that
they can clear the market at normal interest rates. In other
words, commercial banks cannot release loans in time or
enterprises cannot obtain loans in a timely manner.
B. Corporate Finance Cycle Theory
that the reputation of the enterprise will change along with the
life cycle of the enterprise. As time moves, the information
exchange between enterprises and commercial banks will also
change. Therefore, in the process of development and growth,
different companies must have different financing plans at
different life stages.
C. Financing Sequence Theory
The financing order theory, as the name implies, is the
order of financing quality. The theory believes that listed
companies will integrate various factors when choosing
financing methods, and will make decisions based on a
profound principle. All financing theories agree that financing
costs are decisive for companies' financing choices. Sequential
financing theory considers information asymmetry and believes
that the order in which companies choose financing methods
should be based on the principle of cost minimization.
Firstly, endogenous financing with no transaction costs
should be selected; secondly, debt financing with lower
transaction costs should be selected; and for the most
demanding and costly financing method, equity financing,
which may lead to the dispersal of control rights and the
underestimate of the enterprise value, it should be ranked last.
III. EMPIRICAL ANALYSIS
The infrastructure construction industry has a huge market,
and the listed companies generally have relatively large
revenues. After studying the data of the Shanghai Stock
Exchange and the Shenzhen Stock Exchange, we removed
companies that were ST due to their financial status and those
with incomplete financial data. As of 2016, there are a total of
30 listed companies in the infrastructure construction industry.
157
 In addition to China Communications Construction and JSTI, IV. EMPIRICAL ANALYSIS
there are 8 municipal engineering companies, 9 highway
engineering companies, 3 railway engineering companies, 4 A. Descriptive Statistics
water conservancy and hydropower engineering companies,
and 4 power engineering companies. This paper selects the data TABLE II.  RATIOS OF VARIOUS FINANCING METHODS IN THE
of 20 listed companies in the infrastructure construction INFRASTRUCTURE CONSTRUCTION INDUSTRY
industry from 2011 to 2016 for research, and counts the cost
rates of various financing methods from 2011 to 2016, and 9DULDEOHV
<HDU
analyzes the impact of financing costs separately. IFA LDA EFA ALA
2011 0.0975 0.1832 0.1609 0.4321
A. Variable Definition 2012 0.0968 0.1693 0.1718 0.4430
This paper selects five influencing factors, namely 2013 0.1151 0.1941 0.1860 0.4740
profitability, solvency, growth ability, capital structure and
financing risk. All design variables are shown in the table 2014 0.1236 0.1593 0.2016 0.4925
below. 2015 0.1393 0.1527 0.2276 0.5101

2016 0.1435 0.1399 0.2320 0.5191

TABLE I.  DESCRIPTION OF VARIABLE
Comprehensive 0.1194 0.1663 0.1969 0.4788
9DULDEOH 7DEOH&ROXPQ+HDG
W\SH Indicator name Variable name Shorthand It can be seen from TABLE II that in the infrastructure
Internal financing construction industry, the proportion of internal financing is
IFA very small, basically not exceeding 15%, while the proportion
rate
Bank borrowing
LDA
of external financing is higher than 80%, indicating that the
Explained
Financing
rate enterprises in this industry prefer external financing. In external
variables Equity financing financing, the proportion of bank loans is the smallest,
EFA
rate
Bond financing
followed by equity financing, while the proportion of bond
rate
ALA financing is the highest, and it is increasing, indicating that the
Bank loan Kr
state’s policies to encourage bond financing have been
effective in recent years. Generally speaking, enterprises prefer
Financing costs Equity financing Ks equity financing, while infrastructure construction enterprises
Debt financing Kd
do not show obvious bias, which is largely related to the
participation of state-owned shares in these enterprises.
Assets and
Capital structure ADP
liabilities
Explanatory Dividend payout B. Regression Analysis
Dividend payment DIV
variables ratio 1) Regression Analysis of Endogenous Financing
Interest coverage
Solvency ITM
ratio
TABLE III.  REGRESSION ANALYSIS RESULTS OF ENDOGENOUS FINANCING
Financing risk Financial risk DFL
Regression Standard t Significance VIF
Profitability ROE ROE coefficients error
Growth rate of (cons) 0.2299 0.0235 9.7685 0.0000***
Growth opportunity TAG
total assets
ADP -0.3001 0.0304 - 0.0000*** 1.1663
B. Modeling 9.8620
DIV 0.1391 0.0319 4.3652 0.0000*** 1.0417
This paper selects panel data and establishes the following
model. ITM 0.0009 0.0004 2.3077 0.0223** 1.3575
TAG 0.0736 0.0399 1.8446 0.0671* 1.8175
DFL 0.0059 0.0017 3.5119 0.0000*** 1.0875
Among them, is a constant term, is a regression ROE 0.2518 0.0809 3.1116 0.0022*** 1.8828
coefficient, is a random error term, and represents four
N 155
financing methods, , t represents
the t year. F 36.724***
ADJ- 0.582
R2
2) Regression analysis of bank loans

TABLE IV.  REGRESSION ANALYSIS RESULTS OF BANK LOANS

Regression Standard t Significance VIF
coefficients error

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 (cons) 0.0158 0.0307 0.5145 0.6077 judge the good model fitting index, the value range is 0-1, the
closer to 1, the better the model fitting effect. It is generally
ADP 0.2257 0.0397 5.6885 0.0000*** 1.1663 accepted that the adjustment of R in the economic model is
DIV 0.0923 0.0416 2.2203 0.0279** 1.0417 greater than 0.2, and the fitting result of the model can be
considered acceptable. In this study, the adjusted R is greater
ITM -0.0020 0.0008 - 0.0186** 1.3575
than 0.2, indicating that the model fitting effect is better. F
2.3794
TAG -0.0886 0.0521 1.7014 0.0910* 1.8175 values are significant at 1% level, indicating that the model
fitting is valid. Tolerance and VIF are indicators to judge
DFL 0.0164 0.0048 3.4224 0.0008*** 1.0875 whether regression variables have collinearity. It is generally
ROE -0.2602 0.1055 - 0.0148** 1.8828 believed that indicators with VIF greater than 10 will produce
2.4654 collinearity. The results show that the model is not collinear.
N 155

F 13.366*** V. CONCLUSION

With the acceleration of economic globalization, China's
ADJ- 0.342
R2 economy has more and more connections with other countries.
3) Regression analysis of equity financing It is more difficult to predict the changes of China's economy.
As an economic organization, companies are also facing more
TABLE V.  REGRESSION ANALYSIS OF EQUITY FINANCING
complex external environment. Capital is the blood of an
enterprise, and the issue of enterprise financing is very
Regression Standard t Significance VIF important. Due to the changes of external environment and
coefficients error internal management, it is difficult to predict the results of
(cons) 0.6223 0.0458 13.5898 0.0000*** enterprise financing, so it is necessary to study the financing
ADP -0.4181 0.0592 -7.0634 0.0000*** 1.1663
problem in real time.

DIV 0.2808 0.0620 4.5307 0.0000*** 1.0417 Through literature analysis and data statistics, it is found
that although the cost of equity financing is high, Chinese
ITM 0.0039 0.0012 3.3913 0.0009*** 1.3575 enterprises generally prefer equity financing, which is mainly
TAG 0.0661 0.0277 2.3906 0.0180** 1.8175 due to the large scale and less constraints of equity financing.
Through the empirical analysis of the six-year data of the
DFL 0.0119 0.0071 1.6708 0.0969* 1.0875 infrastructure construction industry, according to the model
ROE 0.2701 0.1574 1.7159 0.0883* 1.8828 results, we can see that the asset liability ratio has a positive
impact on bank borrowing, and has a negative impact on
N 155 endogenous financing, equity financing and bond financing;
F 19.177***
dividend payment rate and financial risk have a positive impact
on the four financing methods, but the coefficient of financial
ADJ- 0.415 risk in each model is very small, indicating the impact Interest
R2 cover ratio, growth and return on equity have a negative impact
on bank loans, but have a positive impact on endogenous
4) Regression analysis of bond financing financing, equity financing and bond financing.
TABLE VI.  REGRESSION ANALYSIS OF BOND FINANCING According to the results of the analysis, this paper puts
Regression Standard t Significance VIF
forward three suggestions. Firstly, the state should help to
coefficients error
improve the equity structure of listed companies, secondly, the
state should improve the bond market. Finally, the state should
(cons) 0.4494 0.0333 13.4959 0.0000***
advocate endogenous financing to enhance the competitive
ADP -0.5157 0.0430 - 0.0000*** 1.1663 advantage of enterprises.
11.9815
DIV 0.1448 0.0451 3.2135 0.0016*** 1.0417 Because the risk of stock financing is relatively small and it
can raise a large enough scale, most Chinese enterprises like to
ITM 0.0019 0.0009 2.1327 0.0346** 1.3575 raise funds through stocks. Regarding this issue, first of all,
TAG 0.0638 0.0265 2.4094 0.0172** 1.8175 companies must be encouraged to issue cash dividends, so as to
show the true value of funds. When cash dividends are
DFL 0.0066 0.0022 3.0275 0.0029*** 1.0875 distributed, reasonable policies should be used to restrict
ROE 0.2228 0.1145 1.9467 0.0535* 1.8828 corporate refinancing, which can improve the rationality of
listed companies' refinancing, and this can well restrict
N 155 corporate refinancing. Second, we must use regulatory policies
F 39.458*** to weaken corporate equity financing preferences. The
preference of companies for equity is more or less because the
ADJ- 0.600 dividends are determined by the companies themselves. The
R2 government should use certain policies to guide and restrict the
The above four tables are the regression results of the four
dependent variables. The adjusted R-square (Adj-R2) is used to

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 company's dividends, and stipulate that companies must pay a
certain percentage of dividends for stock financing.
The tax of the interest on bond financing can be reduced,
which can increase the company’s market value, and bond
financing can avoid moral hazard and adverse selection, which
can improve corporate governance. Therefore, the government
should facilitate corporate debt financing from policies and
regulations, and the entire society should also provide a relaxed
environment for corporate debt financing, so as to promote
corporate debt management.
The government's financing policies for listed companies
and the approval requirements of review agencies for corporate
financing are relatively strict, which can compensate for the
defects of the market economy and ease economic fluctuations,
but this strictness limits the growth of the bond market to some
extent. Therefore, when the company is in good condition and
the bonds issued have strong guarantees, good environmental
conditions should be provided for the company to issue bonds.
Increase the company's competitive advantage, thereby
improving the company's performance and profitability, and
then it can promote endogenous financing. Innovation and
improvement within an enterprise, such as improving the
internal structure and optimizing the combination of resources,
is an important way to improve the competitive advantage of an
enterprise. Another important way is enterprise association.
There are many ways of enterprise association, such as
production association and marketing association. If enterprises
can choose the right way, the competitive advantage can be
improved. Enterprises should plan internal accumulation of
resources and minimize their dependence on external sources
of financing to expand their scale.
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