The Process Of Marketization,Ultimate Control Rights And The Governance Effects Of Debt Financing

Previous studies have shown that debt financing is not only a mere means of financing, but also has governance effects. This paper gives a research on the governance effects of debt financing not only from the perspective of ultimate control rights, but also paying attention to the institution environment. We select the companies which were listed on the Shanghai and Shenzhen exchanges from 2004 to 2008, and first give an empirical research on the governance effects of debt financing due to the difference of ultimate control rights, and then try to find the governance effects of debt financing under different ultimate control rights due to difference of the process of marketization. The results suggest that: Overall, the governance effects of debt financing under different ultimate control rights show negative, but compared to those non-state-controlled listed companies, state-controlled ones have more strong negative effects. The findings also show that the effects of the process of marketization to the governance effects of debt financing are quite not the same under different ultimate control rights. Our findings suggest that as the"infrastructure"of the market, for those non-state-controlled listed companies, the improvement of the process of marketization has a positive effect on the governance effects of debt financing, while for those state-controlled listed companies,these effects will be weakened due to the"fatherly effect"of the government ,and the governance effects of debt financing can not be fully displayed. In order to improve the governance effects of debt financing, we should deepen the reform of those state-controlled listed companies, peel off the intervention of the government, meanwhile to speed up the process of the marketization to balance the development of different areas in order to provide a good institution environment of listed companies.