An Empirical Study On Listed Companies' Ultimate Control Characteristics And Debt Financing

One report from Shanghai Stock Exchange Research Center(2005) showed that the private companies faced the problems of financing difficultly. However the study of All-China Federation of Industry and Commerce reports that the private enterprises have been developing vigorously in recent years. The growth of the private economy investment is 31.07% in 2008, which is 5.61% higher than the national average level. At the same time the investment of private economy accounts for 64.9% in the total social investment at the end of 2008. Although financing difficulties of private economic, the investment and development of private enterprises is much higher than the national average. So our question is that how the private economy gets rid of the plight of money?From this phenomenon,this article studies the ultimate control people how to solve the financing problem. Ultimate control people choose debt financing when the main consideration debt financing of non-equity dilute effect, or consider debt financing bankruptcy of risk. From four aspects of the ultimate control characteristics :Types of ultimate control, ultimate control proportion, and cash flow right proportion and the degree of two rights separation, this article studies the ultimate control people characteristics on the influence of debt financing. On the basic of the domestic and foreign related researches and combining with China's unique system background, this paper adopts empirical research method and uses 2500 A-Share listed companies samples from the Shanghai and Shenzhen Exchanges from 2006 to 2008. Through the study, we find that:(1) We find no differences between non-s and state-owned listed company at listed asset-liability ratio and even state-owned listed companies is higher than private listed companies, but this difference is not significant. But the two long-term debt financing differs; state-owned listed companies use more long-term debt than the private listed companies. (2) The voting rights and the cash flow rights proportion of the ultimate controllers increase can help to reduce the level of debt financing. (3) If the separation of the voting right and of cash flow right, the ultimate controlling shareholder prefers debt financing. (4) 82% of the private listed companies exist the separation of the voting right and of cash flow right,only 32% state-owned listed companies exist that. Not only at the number of companies, the degree of separation differences between the two, private listed companies are much higher than the state-owned listed companies.