Mechanism Research Of Debt Financing And Corporate Governance Of Chinese Listed Company

Choice of financing or corporate financing portfolio, and financing options, or combination of financing costs and benefits of the impact of these issues has been a corporate finance theory and practice focus. Debt financing is not only a major listed company funding method, but also an important corporate governance tool. Effective in reducing the debt financing of corporate governance between shareholders and managers of agency costs, protect the interests of creditors, to improve corporate performance has played a pivotal role.In this paper, fully draw on the basis of literature, based on 2003-2008 data from listed companies of debt financing in China, corporate governance and corporate performance relationship. The results show that: (1) agency costs of debt financing and changes in the opposite direction was. Short-term debt financing agency costs have a significant negative effect, while the coefficient responsible for financing long-term significance test does not pass on agency costs, and no negative effects. Increase in commercial credit and bonds will reduce agency costs. The company and agency costs into the scale of change in the opposite direction, through the large ownership concentration also increased agency costs. (2) debt financing rate on the free cash flow has significant positive effect, but the short-term debt to free cash flow has a strong inhibitory effect, and long-term liabilities, there contribute to the effect of the amount of free cash. Ownership concentration on the free cash flow are inhibited, while the bank loan rate on the marginal impact of free cash flow the most, when the 1% increase in bank borrowings, free cash flow will increase 1.251%; and commercial credit, bond financing of the free cash flow significant inhibition. (3) debt financing and firm performance is positively related to short-term debt would increase business performance, and increase long-term liabilities will reduce the company's performance. Return on assets on firm performance has a significant impact. Free cash will reduce the amount of increase in performance, and agency costs on corporate performance has a positive effect.Based on the above conclusions, this paper argues from the perspective of policy choices, the first should establish and improve relevant laws and regulations for listed companies to provide a sound legal basis for the bankruptcy, the only way to really establish a true sense of the bankruptcy exit mechanism, the threat of bankruptcy to become the operator the hard constraints, which play the governance effects of debt financing. Second, banks as major creditors should participate actively in corporate governance and in accordance with the principle of selecting the most efficient and effective monitoring mechanism. In addition, listed companies, should take full account of the financing debt financing, and appropriately increase the proportion of debt financing. At the same time, we must optimize the structure of corporate debt financing, and increase long-term debt ratio and the proportion of corporate bond financing, give full play to the long-term debt and corporate governance effects of debt and improve financial performance. In the case of the conditions are ripe, it can issue corporate bonds to raise funds not only help to improve the sources of existing debt listed company structure, but also can reduce agency costs and improve the efficiency of corporate governance.