Research On Motivations And Effects Of Chinese Listed Firms’ Abnormal Guarantee

In recent years, the circle of security crises, from the earliest Shenzhen Guarantee Circle, Xinjiang Guarantee Circle to Hunan Guarantee Circle, western Liaoning Guarantee Circle etc. Guarantee Circle prone to chain effect, problems of an enterprise, which will cause the burden of upstream guarantee enterprise joint responsibility for repayment, while the downstream enterprise it guaranteed will be lost because of security is the recovery of bank loans, thus affecting the guarantee circle of enterprise cash flow. The structure of financial market is closely, therefore, the risk of individual listing Corporation risk easily spread into a "system".The more serious problem is the listed Corporation guarantees exist over security and illegal guarantee. "Hebei-northwest of Guarantee Circle" has been exposed in 2007, involving several major listing Corporation such as Baoshuo, ST Canghua, Tung Shing Technology, intentionally conceals serious exist in major security issues. These listing Corporation occured over-guarantee and illegal guarantee involve so great, what motives lead to listing Corporation net assets is negative but also for other enterprises to provide a guarantee, in a major issue on security intentionally hide. There are some guarantee circle is continuous bond in years of continuously under the condition of existence, a listing Corporation for 9 consecutive years,10 years for what is a few companies provide security guarantee behavior and motivation, and these will produce what kind of influence to the listing Corporation.This paper studies the motivation and the effect of abnormal guarantee behavior of the listing Corporation. Abnormal guarantee is beyond the scope of a listing Corporation’s own ability to guarantee, including excessive illegal guarantee and continuous guarantee. Assets and liabilities rate more companies are more likely to be involved in an unusual guarantee. Abnormal guarantee brings negative effect is remarkable, it causes the level of investment company performance decline, rising costs and reducing agent company.In this paper, the issue of listed companies has secured inspiration. At present, China’s listing Corporation of foreign guarantee especially over guarantee, illegal guarantee and continuous guarantee normal conditions guarantee there is a huge risk, at the same time guarantee circle problem is increasingly serious, risk concentration and amplification of the guarantee circle. But in our country there are still external security laws and regulations are not perfect, the corporate governance structure, the weakening of banks and other financial institutions supervision and the narrow channels of financing and other issues, in view of this, the relevant departments should actively improve the legal system of listing Corporation foreign guarantee, strengthen the listing Corporation of the external guarantee of internal governance mechanism, banks and other intermediaries play a role in external supervision.