Research On The Effect Of Debt Financing On Corporate Governance In China's Listed Companies

The integration of new capital structure theory and modern corporate governance theory showed that debt financing played a important role on corporate governance.To study the effect of debt financing on corporate governance and to propose related policy suggestions to improve mechanism of creditor governance is favorable to improve corporate governance and protect creditor.Compared with the existing studies,this paper Considered special,background of equity structure of Chinese listed companies that there is often an ultimate controller.The author thought that whether debt financing Can make observable financial governance performance depend more on whether debt financing can put constraint on the second kind of equity agency cost.The innovations of this paper are as follows:(1) Study the effect of debt financing on two kind of equity agency cost and divide the first kind of equity agency cost into explicit agency cost and implicit agency cost to make a deep study.(2) Make use of the opinion of ultimate property right to classify the listed Companies as government ultimate control and private ultimate control and study the difference of effect of debt financing on corporate governance in this two groups by introducing interaction item.The conclusions are as follows:(1) Debt financing makes negative effect on the first kind of equity agency cost.(2) Debt financing makes more negative effect on the first kind of equity agency cost in private ultimate companies,compared with government ultimate companies.(3) The negative effect of debt financing on the second kind of equity agency cost is larger than the restriction effect.Debt financing aggravates the tunneling degree of ultimate controller.(4) After controlling the effect of tunneling on financial performance,debt financing shows weak governance effect on implicit agency cost.(5) Under the condition that debt financing doesn't make significant effect on constraining the first kind of equity agency cost,to choose a larger degree of short-term debt is optimal for the controlling shareholders.So this paper provided a new perspective on the reason why debt maturity is so short for Chinese listed companies.