Capital Structure Of Corporate Governance Effect Study

Theory of capital structure is one of the most important modern theories of finance. In the seventies of twentieth century, with theory of corporate governance being brought out, the attention to study on theories of capital structure has been paid to its efficiency on corporate governance, therefore, the school of capital structure on corporate governance has been formulated and attained a lot of research achievement. Nowadays, the common argument accepted by domestic and foreign scholars is that: under the existed institution framework, capital structure is the base and principle of corporate governance, corporate governance structure is the reflection of capital structure; To some extent, the efficiency of corporate governance is determined by the choice of capital structure.Our country is in the period of economic transition, the reform proceeding of stated-owned companies is confronted with so many problems of corporate governance. The abnormality equity structure in which state-owned shares are in dominated proportion leads to serious problems of insider control and deficient motivation to managers of listed companies. However, the traditional relationship between listed companies and banks, as well as small proportion of corporate bond financing, leads to failure of constraint mechanism of debt. Those two reasons eventually lead to commonly weaken of capital structure's efficiency on corporate governance of our listed companies. Those problems can not be solved by simulating corporate governance pattern of western developed countries. Based on the current situation of our listed companies, this paper discussed the improvement of corporate governance of our listed companies. What's more, it analyzed the efficiency of capital structure on corporate governance in view of investor protection, through which it brought out us an enlightenment. The enlightenment is that, in order to improve the efficiency of capital structure on corporate governance of our listed companies, the most emergency is to perfect our investor protection.