The Effects Of Debt Financing On Corporate Governance Of China’s Listed Firms

Since the theory of financing structure has pointed out debt financing plays animportant role in corporate governance, the scholars have a great deal of theoreticaland empirical research on the effects of debt financing on corporate governance.However, existing research studies the effects of debt financing on corporategovernance only from the microscopic view, and no papers pay attention to whetherthe effects of debt financing on corporate governance is affected by the changes ofmacroeconomic environment. Therefore, this paper studying the effects of debtfinancing on corporate governance in the changes of macro environment hasimportant theoretical and practical significance.From the perspective of monetary policy and combined with China’s listedcompanies’ financing structure, this paper explores the effects of debt financing oncorporate under tight monetary policy. Firstly, this paper has analyzed China’smonetary policy and corporate financing. Then, this paper has analyzed the impact oftight monetary policy on corporate governance of debt financing. Finally, this paperuses China’s listed companies’ data to empirical whether tightening monetary policyhas an impact on the effect of debt financing on corporate governance, and makesrecommendations based on research findings.Through theoretical analysis and empirical research, this paper finds that:(1)From the perspective of monetary policy, the effect of debt financing on corporategovernance in the tight monetary policy is better than in the easing monetary policy;(2)From the perspective of company ’s property, compared with the state-ownedlisted companies, the effect of debt financing on corporate governance in the non-state-owned listed companies is better；(3) From the perspective of debt maturitystructure, the effect of short-term debt financing on corporate governance is betterthan long-term debt financing. Based on the conclusions of this paper, the thesisindicates that under tight monetary policy, firms should adjust financing structure，thatis，to improve the effects of corporate governance and enhance corporate value byincreasing the proportion of debt financing, particularly in the proportion ofshort-term debt financing. To the state-owned listed companies, we need to reform theproperty rights and strengthen supervision to improve budget constraints.