Chinese Corporate Bond Financing And Corporate Governance: An Empirical Study

Why is Chinese corporate bond market so slow? In general, the long term control policy of Chinese government caused the stagnancy of Chinese corporate bond market . Based on the market principle , this paper combines the theory with the practice and does a systemic analysis for Chinese corporate bond financing from the point of view of corporate governance firstly .Firstly , this paper looks back the theory of the relation between capital structure and corporate governance . Four kinds of representative theory are mentioned , that is the theory of agency cost, the pecking order theory of financing, the theory of control and the theory of transaction-cost economics . Among them , the theory of agency cost sets out from the relation of the agent and the principal and studies the capital structure of minimum agent cost ; the pecking order theory of financing study the choice of corporate financing mode when asymmetry information exists between the investors and the manager ; the theory of control set out from corporate control and contest of it , and explain the influence to corporate control market of different corporate financing mode , manager's preference to debt financing mode and the advantage of debt financing; the theory of transaction-cost economics think capital structure is selective corporate governance essentially .Secondly , this paper does comparative analysis for five kinds of matching relation between corporate governance and the choice of corporate financing mode which exists internationally . It includes : the matching of direct financing preference and external supervise and control in U.S. and U.K. ; the matching of indirect financing and internal supervise and control in Japan and Germany ; the matching of family enterprise and family control in East Asia ; the matching of the proprietor vacancy and internal person control in the state-owned corporate of the transformational country and the matching of Chinese corporate equity financing preference , bank credit financing preference and key person control.Thirdly . the paper analyzes the corporate governance mechanism difference between corporate bond and bank loan at the condition of asymmetry information. 1. bank system prefer to use " relation" to acquire the internal information to lower the information asymmetry ; Corporate bond prefer to get corporate public information by using corporate self-disclosure mechanism , investment bank and rating institute etc.. 2. Under the bank system , bank loan risk is controlled and supervised by the main bank ; while the corporate bond risk is controlled and supervised by many factors : themost important is the information disclosure mechanism forced by law and regulations ; secondly the agency can process the public information ; the bond holders can detract the risk by the way of transaction and portfolio investment etc. ; in addition , the corporate bond market price is timely , public and reachable which contains the investors' judgment of corporate risk and return from the past to the present even the future . Finally, under the bank system, the contract between corporate and bank is implicit, and the constraints of the bank loan is soft to corporate ; But the contract terms of corporate bond is very explicit, When the corporate breaches contract, the corporate will enter the settlement procedure very soon and the constraints of it is strict to corporate.Fourthly , the paper analyzes the current status of Chinese corporate bond financing . It makes a complete introduction to the change of Chinese corporate financing since Year 1949 , play special emphasis to the rise and fall process of Chinese corporate bond financing since the innovation era . The development of Chinese corporate bond market is obviously behind of and other financial market and development of macro economy . and it shows serious non-corporate tendency . A lot of problems exist in the current corporate bond market , it includes the disadvantageous influence towards corporate bond market development form the equity financing...