The Research Of Debt Financing Effect On Corporate Governance In Chinese Listed Company Of Pharmacological & Biological

Debt financing proves to play a very important role in corporate governance. This paper begins with a brief introduction of the theory about debt financing and corporate performance, meant to disclose the relationship between them. It then highlights the effect of debt financing on corporate governance from four aspects, i.e., the cost of agency, manager restriction, signal transfer and control-rights.Based on the theoretical analysis above, the thesis selects 80 China's Listed Company of Pharmacological & Biological that had listed before the end of 2005 and collects data about some kinds of corporate liabilities ratios and performance indicators of these companies from the annual of 2006. Then descriptive and regressive analysis is used in the follow-on research. Debt of different maturity and from different creditors would influence corporate governance in different ways. The paper classifies debt financing to analyze different type influence factors produce different corporate performance. Using SPSS13.0, the essay makes an empirical research about the relationship of corporate performance and debt level, debt deadline, debt type. The results show that the Corporate Performance changes with D3,LLSL and G in the same direction, while with LA,D1 and D2 in the opposite direction. I introduce the debt-oriented C.G. in Japan which strengthens the external C.G. effects and relate the present situation of China's Listed Company of Pharmacological & Biological in transition economy. Then this thesis raises some suggestions to improve the governance effects of the debt financing of China's Listed Company of Pharmacological & Biological.Some suggestions are put forward at the end of the thesis for China's Listed Company of Pharmacological & Biological. Above all, we should perfect bankruptcy and credit evaluation mechanisms, improve the function of the stated-owned commercial bank, develop corporate bond market. Besides these, the regulatory department should foster a complete and transparent security market. After combining conclusions from this paper and the practical of capital market in China, we make some related suggestions to optimize or improve corporate performance.