Ultimate Owenership Structure, Legal Environment And Debt Maturity

Equity capital and debt capital are the two main source of enterprise capital. Debt capital of enterprise, as the most important source, plays a decisive role in the capital structure of enterprise. In the process of debt financing, emprise need to consider not only the quantity and scale, but also the maturity structure of debt, because appropriate debt maturity structure can help enterprise reduce debt financing cost, avoid financial risk and failure rate, and even retard the agent problems.In the research of enterprise maturity structure, there is need to combine the financial market and legal environment of our country for analysis, because China has the special financial market and legal environment. This thesis aims at researching the relation of the ultimate ownership structure and maturity structure of the listed companies in the financial market and legal environment of China. This thesis(under control of related variables and the application of MLR and fixed-effect model) has collected the non-financial listed companies’unbalanced panel data during 2007 to 2013 and got 5874 observations of 920 companies to demonstrate the relation of the ultimate ownership structure, the separation between ultimate control and ultimate ownership and debt maturity structure; and also the difference of various debt maturity in Chinese legal environment.The results showed that in our country and most countries in the world, the ultimate control phenomenon exists generally, and the ultimate controller is the nation itself. It indicates that companies in China do not have a very free capital markets and information symmetry, in many cases it would be infected by the government’s administrative intervention. The ultimate owner ship of the cash flow rights and corporate debt maturity is significantly related to the instructions of the company,when the company’s actual controller with higher ownership, in the process of debt financing, it would prefer long-term debt. When ultimate control and ultimate ownership have a large deviation, companies will have higher levels of short-term debt. On the one hand, shows that creditors not willing to pay for these two rights separation through high company to provide long-term capital. On the other hand, shows that short-term debt has remarkable achievement in the time to solve the problem of agency, because the short-term debt has the characteristics of the regular servicing, can regularly cut managers’ free cash flow, reduce management the possibility of investment projects with negative net present value.Our country is a large country,The market-based degree in different regions, the level of financial development and legal system environment have significant differences, therefore, this thesis further combines different parts of China legal environment to study the debt maturity structure of listed companies and found that the legal system environment does significantly influence on the debt maturity, when the listed company of regional legal environment is ideal, it was obtained by long-term borrowing more, on the contrary, it get fewer long-term borrowing. Finally, this thesis is based on the research results, the corporate governance of listed companies in China, debt maturity structure decision and put forward of the policy suggestions to improve the legal system environment in China.