The Effects Of Debt Financing On Corporate Governance Of China’s Small And Medium-sized Enterprises

The western scholars have theoretically researched on the governance effect of capital structure for many years,and the domestic scholars also have extensively studied the corporate governance effect of debt financing from theory to practice. For a long time, China’s statistical system is not completely established so that there is the lack of debt financing data of small and medium-sized enterprises(SMEs), which are accounted for more than 95% of the total number of enterprises of our country. As a result, most literature researches on governance effect of debt financing are based on the A-share main market as the research sample, lacking of SME board data. But at the same time, the discussion of the financing difficulties of SMEs is still a hot issue.And Chinese government advocates to increase the financial support for SMEs in recent years.What governance effects will the SMEs’ debt financing generate?There are many disagreements among existing researches on the corporate governance effect of debt financing.This paper constructs its unique logical analysis framework, which starts from the analysis of debt financing to the entrusted agency cost and ends with the analysis of the corporate governance effect.By analyzing 3019 mixed data of listing corporation from 2008 to2013 in Shenzhen Stock Exchange, this paper studied the effects of debt financing on corporate governance of China’s small and medium-sized enterprises. The results show that:(1) China’s small and medium-sized listing corporation debt financing has negative correlation with the effect of corporate governance,which means increasing the debt financing,the small and medium-sized companies can reduce agency cost and also improve the performance of the company;(2)From the aspect of debt financing term structure of the small and medium-sized listing corporations, short-term debt governance effect is stronger than the long term;(3) From the aspect of debt financing source structure of the small and medium-sized listing corporations,commercial credit debt governance effect is stronger than the bank liabilities;(4) the decrease of the entrusted agency costs can efficiently improve the performance of SMEs.Based on these conclusions, this paper proposed that we can further improve the debt financing’s positive influence on the governance of SMEs by clearing the position of the government, constructing the structure of debt financing reasonably, increasing the proportion of corporate bonds,accelerating the construction of enterprise information transparency mechanism and improvingthe legal environment.