The Research On The Governance Effect Of Debt Financing In China Listed Companies

The paper did a research on the corporate governance effect of debt financing based on the development situation and reality of China listed companies. China’s capital market started in1990s, and has a history of only twenty years. So compared with mature capital market in the world, the development of China’s capital market is not yet perfect. No matter judging from the theoretical study or the practical application, the corporate governance effect of debt financing has not drew enough attention. The paper did a deeply study on the related theories and analyzed the development situation in our country, and then did an empirical research on the corporate governance effect of debt financing. The target of this paper is to discover whether debt financing benefits the corporate governance effect. The conclusion of this paper can provide a guidance and a suggestion to the perfection of debt structure in China’s listed companies and the development of China capital market.Firstly, the paper did a summarize and evaluation of theories related to corporate governance effect of debt financing in or out of China. In the theory part, the paper defined some concepts, such as corporate governance, financing structure, the relationship between corporate governance and financing structure and corporate governance effect. Moreover, the paper analyzed necessary theories, including corporate governance theories (Principal-agent Theory, Insider Control Theory, Pecking Order Theory), Stakeholder Theory and MM Theory. Besides, the paper also discussed the corporate governance mechanism of debt financing, including Incentive Effect, Signal Transfer Effect and Control effect. Finally, the paper made a comparison about the corporate governance effect of debt financing between China and other countries.Based on previous theoretical research, the paper did an empirical research. Firstly, the paper put forward research hypothesis, and then selected research variables, which were considered from corporate governance aspect, debt financing aspect and control aspect. In addition, the paper chose the samples and designed research models. In empirical research part, SPSS was used to do statistic analysis. Finally, the paper analyzed the results of empirical research.In the last part of this paper, Debt Soft Restriction was induced to explain the contradiction between theory and practical result of empirical research in China’s listed companies. Furthermore, the paper put forward five suggestions to the development and perfection of China’s capital market. They are reforming the relationship between banks and companies, promoting the development of bond market, enforcing the impact of manager market to managers, and improving the the formulation of related laws and regulations. Finally, the paper made a conclusion and figured out the shortages.China’s capital market is not mature and perfect. But with continually development and efforts made, we believed that it will have great improvement. The corporate governance effect of debt financing will be more obvious.