Corporate Governance Research Of The Listed Companies In China Based On Capital Structure

Corporate governance, in the narrow sense, is the system by which business corporations are directed, controlled and encouraged. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, which is the most important structure in modern corporations. In the broad sense, corporate governance also includes the relationship between corporations and other stakeholders, such as employees, customers, business partners, creditors, the public, and also concerns about the relative laws, regulations and rules governing the listing of stocks. For a corporation, a perfect corporate governance is the key factor in its running when joint stock system has become the basic form of modern corporation system. An investor only invests when he believes that his interests could be protected, while good corporate governance is just an important rule in protecting investors'interests. Not only does corporate governance determine the development of a corporation, it also connects with the rise and fall of a nation's capital market, or even the financial system and national economy. That is because when there are serious defects in the corporate governance of a listed company and the interests of investors could not be fully protected, the investors would not invest in a long term and turn to short-term speculations, which makes the capital market full of bubbles of gamble. The bubbles would not last long, and their breakup would usually lead to financial crisis and affect the development of national economy in the end.Compared with the highly grown macro-economy, the corporate governance of the listed companies in China stays far behind and has become the bottleneck in enhancing the core competitive forces and deepening the economic system reform. The problems in corporate governance to a great extent could find their roots in capital structures. Just as Williamson said, capital stock and debt are not so much financing tools as to control and regulate structure. The kind of capital structure determines the kind of corporate governance. A rational capital structure is the basis of effective corporate governance. Chinese scholar Zhang Weiying deemed that capital structure is the most important factor in corporate governance, whose effectiveness depends much on it. The choice of capital structure is the key problem in corporate financing decision. It directly decides the way of corporate financing and the ratio of...