Ownership Structure, Debt And Firm Value

The western developed countries study confirmed that, reasonable arrangement of ownershipstructure and debt has positive effect on cop orate governance. However, compared to the westerndeveloped countries, corporate governance of China listing corporations has significantly different,especially for strategic emerging industries. This kind of listing corporation is still in the early stagesof development, there is a big different compared to the developed countries in arrangement ofownership and debt structure.Emerging industries of strategic importance is the national keyprotection and support industry in China. Investors have insufficient understanding of the risk oflisting cop orations in the emerging industries of strategic importance because of the un perfection ofChina’s capital market. The value index of listing corporations may not be a true reflection ofenterprise performance. It is still in dispute whether the arrangement of ownership and debt structurewould affect company value of emerging industries of strategic importance of China, although theyare important core means of corporate governance. Because of segmentation and inefficient of China’scapital market, the governance structure of listing corporations to external stakeholders lacksprotection. Is there mutual influence between shareholders and creditors? Is there a positive effect ofcreditors? These are the issues to be studied.The existing studies have shown that ownership structure and debt will affect the firm value. Butmost of them separated the two factors, ignored the interaction among them. Based on theparticularity of the emerging strategic industries, we took261listed companies in Shanghai andShenZhen from2006to2010as a research sample and made empirical analysis of the relationshipbetween ownership structure, debt and firm value. The research showed that, it is an interactivedouble-way relationship between ownership structure and firm value; there is negative correlationbetween ownership structure and debt; the increase in the debt ratio will reduce firm value, debtgovernment is not valid. Further, we find this relationship differs under nature of the firm anddifferent level of marketization.