Research On The Relationship Between Managerial Power And Corporate Debt Financing

Debt financing as an important financial decision of enterprises, its scale and maturity structure essentially reflect the corporate governance structure. The problem of corporate debt financing has been the focus of academic attention. Most literatures have studied corporate debt financing from the aspects of enterprise characteristics, governance structure and financial information. As an important participant in the company’s financial decision-making, managers will largely affect the enterprise’s debt financing decisions. The strength of manager’s power determines the extent to which the firm’s debt financing decisions will reflect the manager’s will.Therefore, based on the principal-agent theory, the managerial power theory and the managerial defense hypothesis, this paper studies the enterprise debt financing decision from the perspective of manager power. This paper mainly investigates the influence of managerial power on corporate debt financing scale and debt maturity structure, and the effect of product market competition on this influence mechanism. And considering the background of China’s property rights system, we analyze the difference of product market competition effect in the nature of different property rights of enterprises. Based on the theoretical analysis and logical deduction, this paper selects the listed manufacturing companies of Shanghai and Shenzhen A-share as samples and makes an empirical test on the hypotheses. The empirical results are in line with the theoretical expectation.The results show that managerial power significantly affects the debt financing. As the power of managers increases, the scale of debt financing will decrease and the proportion of long-term debts will rise. Moreover, the more fierce competition in the product market,the weaker the negative impact of managerial power on the size of debt financing, and the stronger the positive impact on the debt maturity structure. In addition, the analysis of the nature of property rights shows that the government background of non-private enterprises has weakened the effect of product market competition on the relationship between managerial power and corporate debt financing because of "soft budget constraint","implicit guarantee of government" and "policy support".Considering research conclusions and the present situations of corporate governance,this paper puts forward three suggestions from the enterprise and government levels:Perfecting corporate governance mechanism, strengthening supervision and restriction of managerial power. Speeding up market-oriented reform process, promoting orderly competition of product market. Cultivating professional manager market, enhancing the morality and quality of professional managers.