Study On Effect Of Debt Financing On Corporate Performance In Chinese Listed Companies

Since 1990s, corporate governance plays more important role in improving governance efficiency and competitive ability. From modern theories of capital structure and corporate governance, debt financing proves to play a very important role in corporate governance. Now it is most important to study the corporate governance effects and their mechanisms of debts, because of ignoring the roles and their mechanisms of the creditors in former theories and practices on corporate governance, especially in China where the listed corporations with just poor performance have heavy debts but the ones with good performance have little debts, so the corporate governance effects of debts are worsening, the creditors are faced with heavy agent cost and loss. So this paper selects study on effect of debt financing on corporate governance in Chinese listed companies as its topic, which shows both theoretical and practical value in China. Based on the western theories of corporate capital structure and the characteristics of western corporations' financing mode, this dissertation gives a systematic analysis of the effect of debt financing in Chinese listed companies: Debt financing can influence agent cost positively, change manager stimulation, cause signal transfer and control-rights shift. Sampling listed companies from 2001 to 2003, we draw a conclusions :(1) As a whole, debt financing does not constitute a large part of company financing, leaving some space to go;(2) Due to unreasonable debt structure, currently adopted methods in debt financing doesn't help up with corporate governance;(3) The corporate governance effect of floating debt is bad, the rate of floating debt is too high, it should increase rate of long term debt. (4) The corporate governance effect of long term loan is better, short term loan is worse than business credit, that is the reason why the business credit instead of bank loan, the corporate governance effect of the welfares payable,salary payable,dividend payable is good. In China in order to bring the debt financing into play effectively, it is necessary to rebuild the relationship between bank and enterprise; to do the best to develop and to perfect the bond market; to establish a debt-guarding mechanisms; to develop manager market, advance manager accumulation and restraint mechanism actively; participation of correlative interest group.