An Empirical Study On Relationship Between Governance Of Creditor's Right And Performance Of Chinese Listed Company

Corporate governance is a multi-faceted subject. An important theme of corporate governance is the mechanisms which are aimed at reducing or eliminating the principal-agent problem and designing a incentive compatibility structure. According to the modern theory, the principal-agent problem is classified into two categories:the problem between shareholders and managers, the problem between controlling shareholders and other shareholders. Debt financing has in fact become one of the most important sources of corporate finance and the creditors also face the principal-agent problem. Creditors also take a principal-agent costs under the risk of moral hazard and adverse selection owing to asymmetric information and incomplete contracts. The governance of creditor's right has positive influence on minimizing principal-agent costs and improving corporate performance as the equity governance.On the basis of previous studies the author firstly summarizes and analyzes the existing theories on governance of creditor's right in this paper, and then explores and concludes the principal-agent problem in the third category of agency costs, that is, the agency costs between the creditors and the enterprise actual controllers. There are two classifications:the agency costs on situation of normal operation and the other on situation of debt default happened.In this paper, mechanism of governance of creditor's right is theoretically and empirically analyzed. According the study previous, the mechanism of governance of creditor's right is classified into two categories:incentive and constraint mechanism of market and contact constraint mechanism. Then incentive and constraint mechanism of market is subdivided into benefit incentive mechanism, free cash flow constraint mechanism, financial leverage effect, and information transmission mechanism. Contact constraint mechanism is subdivided into bankruptcy mechanism and default constraint mechanism. In this paper, through empirically analyzing, it is demonstrated that debt financing did not play the positive roles, but the negative roles, in corporate governance, in Chinese listed companies, whether the industry nor the ownership characteristic classification, and which is called the governance of creditor's right being weakening and worsening. According to the result of empirical analysis, benefit incentive mechanism, free cash flow constraint mechanism, and financial leverage effect play a positive role in corporate governance, and information transmission mechanism has no effect.Based on the findings above, this paper proposes the following measures:(1) Bank should strengthen its role in corporate governance; (2) The government should develop the debt financing market;(3) Improve the debt contracts and related contracts;(4) Improve the bankruptcy system and related laws and regulations...