The Empirical Research About The Effect Of Executives' Social Networks On Corporate's Debt Financing Costs

In recent years,due to the strengthening mechanisms of financial markets along with the state regulation of the securities market,equity financing for listed companies is more and more strict,and enterprise in the process of rapid development requires a large amount of external funding,so the proportion of debt financing is increasing constantly in recent years,how to effectively reduce the company debt financing costs has become a major decision problem.Chinese society,generally speaking,is very importance to "social relationship","Guan xi" in its own way plays an important role in many commercial activities.A lions share of scholars have found that our company executives' background characteristics including gender,age,education background,social experience,political and financial background,etc.,have an impact of the company's financial and strategic decisions.From the perspective of "interpersonal relationship" this article takes an unique view to study the senior managers of listed companies,the social network similarly have an effect on the company's cost of debt financing.At the same time,we analyze the different influences of the executives' social networks in the financial network,political networks and other networks.Meanwhile we investigate the influence of debt financing cost to constraints and the agency cost of single and double constraints.At first,this paper reviews the former study and empirical research,such as,the set theory,the weak ties advantage theory,human face theory,and so on.Then we take analysis and explanation on this executive social networks and corporate debt financing costs.The executives' networks of listed companies are an important aspect to be addressed as this would have a direct bearing on the cost of the debt financing.This paper focus on the discusses the relationship between the cost of debt financing and the executives of listed companies,divide social network into financial network,political networks and other networks,and verify the different influence of the three aspects to debt financing costs.Finally,this paper also examines the financing constraint variables and the agency cost of single and double constraints under the condition of company executives' social networks on the company's cost of debt financing effect changes.The conclusion of this article points out that company executives social networks have a significant negative impact to the cost of corporate debt financing.That is to say,the richer the listed companies executives' social networks are,the lower debt financing may cost;Financial networks,political networks and the other networks are negatively related with the company's debt financing costs,but only the financial networks and political networks make contribution to that,the other networks,however,have no significant performance;Company executives' social networks' influence in reducing the cost of debt financing is more obvious in company which has financial constraints or high agency cost than in ordinary company,and the conclusion also applies for company which have double constrains.