Debt Structure And Corporate Governance

Since 1990s, corporate governance plays more important role in improving governance efficiency and competitive ability. From modern theories of capital structure and corporate governance, debt financing proves to play a very important role in corporate governance. In China, the listed companies are inclined to stock rights to finance; however, a lot of practices indicate stock rights are not a ideal financing. And then, many listed companies are attempt to debt financing. Certain debts are good signal for the company and also indicate the company provided with larger developing area, but overtop debts will cause the company in danger, especially in China where the listed corporations with just poor performance have heavy debts but the ones with good performance have little debts, so the corporate governance effects of debts are worsening, the creditors are faced with heavy agent cost and loss. So this paper selects study on effect of debt financing on corporate governance in Chinese listed companies as its topic, which shows both theoretical and practical value in China.Because in China a few scholars analyse the debt financing of the capital structure, Debt financing can influence agent cost positively, change manager stimulation, cause signal transfer and control-rights shift. This article at first expatiates basal concepts and relevant theories, and then analyses the debt structure and company governance, in this chapter I mainly expatiate both the interior governance structure and exterior governance structure how to influence the capital structure, at the same time reference the successful experience of the developed countries, especially the Japan-Germany financing mode. Its main bank is propitious to creditors supervise and manage the company to improve the governance efficiency. The western corporations' financing theories indicate the debts is in favor of corporate governance, in our country at present how the debt efficiency of the listed companies and how to increase corporate governance efficiency? These questions are the exact reasons and meanings of our research. Sampling listed companies from 2001 to 2004, we draw a conclusion: debt fails to function well in corporate governance, which accordingly leads to the low efficiency of creditor's governance. We can conclude some reasons. At first, relationship of creditor's rights and the debts is dummy, creditors are always in weak station. Second, bankruptcy mechanism isn't well enough and the business banks innovation are not perfect. At last, bond market is not open. So we can adopt correspond to methods to solve the problems. At last, in the last chapter concludes results of the above theoretical and empirical analysis.