Financing governance from business group of small and medium-sized enterprises—A empirical study of small and medium-sized listed companies in China

Based on the resource dependency theory and social network perspective, this paper suggests that business group is, in essence, a combination of the organizations connected by formal or informal relationship, which reflects the different resource dependence within members of business groups. We then discuss the basic mechanism of relationship contained in the business group in the process of credit financing, from the perspectives of relationship governance and capital structure theory. Empirically, we divided the mutual business dependence, according to the related transactions, into several categories, and further test the relationship of the financing outcomes and those kinds of relations statistically. The result shows that the arm-length relationship, rather than that of affection, is positive to bank loans. At last, some recommendations on how to overcome financing problems are proposed.