Research On The Relationship Of The Agent Cost And Financial Leverage In State-Owned Listed Company

Under the background of separation of ownership and management rights, owners of the companies become trustors and managers become agents. Because information is asymmetrical, the external owners of companies are unable to undrstand the effort level of the managers,which may cause the agents to seek maximization of their own effectiveness but the maximization of shareholder wealth.Agency cost is caused by it.Agency cost has caused much waste of company resources,and has harmed the shareholder and creditor's benefit.Then,it will cause huge disposition to the social resources.In our country,agency cost is serious for the state-owned enterprises,so how to reduce agency cost has become an important question.It has been confirmed by the western finance theory that debt can enhance the possibility of financial crisis,reduce the FCF,and improve the professional supervision of the bank.Then it will reduce agency cost, and improve the company quality.But the scholars in our country has got different result.Most people don't think debt is helpful for reducing the agency cost,and even increase it.We think it is because soft budget constraint in our country.This article selects a sample of state-owned list companies and research the relationship between agency cost and financial leverage.We got the result that agency cost and financial leverage present positive correlation.Further more,we research the correlation between agency cost and financial leverage under different equity concentration of state-owned shares.and we got the result that the effective of financial leverage become stronger and stronger with the increase of equity concentration of state-owned shares.Finally, based on the conclutions, we have put forward some suggestions from the system construction angle.It is very meaningful to decrease agency cost of the state-owned list companies and will helpful to promot our capital market health.