CEO Social Capital, Corporate Debt Financing Behavior And The Efficiency Of Capital Allocation

The company’s investment and financing behavior is vital for the development of the enterprise. This is important for a company to achieve its goal that maximize the value of the company. Effective financing and investment behavior is helpful for an enterprise to survive in the fierce competition environment and to become bigger and stronger. However, investment and financing behavior often interact. For example, financing constraint problem is bad for the investment and development of the enterprise (Stein,2003). Facing of financing constraints problem, companies sometimes have to give up an investment projects with positive net present value (Myers,1984). And efficient investment behavior will help enterprises to accumulate better reputation and improve the financing efficiency.Previous studies have shown that foreign classical financial theory is not suitable for the actual situation of China, Our country is in an economic transition period, at the same time, the financial legal system is not perfect, enterprise’s financing behavior is more rely on the social mechanism, the financial behavior of enterprises show some sociality. Therefore, research and the corporate financing behavior which is suitable for the economic system of socialism with Chinese characteristics has practical significance. This paper argues that the social network as the research content of the social capital theory to can explain the financing behavior of Chinese characteristics. CEO, as the soul of the enterprise, has a great influence on enterprise management. On the basis of previous studies, this paper from the Angle of social capital, to analyzes the CEO’s role in the process of social capital in the enterprise financing mechanism.This paper first discusses the theory of social capital, second, from the prospective of the effect of ability in CEO’s access to resources, this paper constructs CEO social capital index. Finally, on the basis of theoretical analysis, it uses empirical tests of the influence of social capital on financing behavior of the enterprise and verifies the effectiveness of firm’s financing behavior.This study found that the CEO’s social capital can bring certain resources for the enterprise, ease the financing constraint problem to a certain extent and improve enterprise debt financing ability, at the same time, it also helps to improve the efficiency of enterprise capital allocation.