A Research Of Relationships Between Debt Financing,Perk Consumption And Firm Performance

According to the analysis of Financing Structure Contract Theory,Debt Financing,influence Corporate Governance,then ultimately affect the Firm Performance,mainly through the work and other behaviors of managers,the allocation of corporate control,and the investors' determines of the business situation.Roughly speaking,a reasonable Debt Financing can help optimizing the performance of Corporate Governance and improve Firm Performance.Debt Financing can affect the work effort and other behaviors of managers.From the perspective of managers,this incentive effects will affect their behaviors,causing changes in their wages,consumers and other personal effectiveness,and ultimately affect the Firm Performance.Therefore,Debt Financing has a "incentive effect" toward Perk Consumption.And its mechanism is that when Debt Financing increases,Perk Consumption will decrease,eventually causes changes in Firm Performance.Perk Consumption phenomenon is very common in various countries.Based on today's mainstream point which is Agency view,the author believes that Perk Consumption is a behavior of managers' pursuit of maximizing their personal interests,it constitutes the principal agency costs between shareholders and managers,it is a waste of corporate resources.Therefore,perk consumption would have a significant negative impact on Firm Performance.To sum up,the incentive effect of Debt Financing will affect the behavior of managers,ultimately affect the Firm Performance,and the Perk Consumption is a typical managers' behavior.Similarly,based on the theory of agency,Perk Consumption will impact on Firm Performance.Although many scholars have done some research on the relationship between Debt Financing and Firm Performance,but these studies just stop at accounting Firm Performance as the dependent variable,accounting Debt Financing as independent variable,directly studied there relationship,ignored that there may be some intermnediate variables.In view of this,this research will introduce an intermediate variable----Perk Consumption,attending to study the relationships between Debt Financing,Perk Consumption,and Firm Performance.In order to understand the relationships between Debt Financing,Perk Consumption,and Firm Performance,this research will base on the Financing Structure Contract Theory and the Theory of agency,accounting Perk Consumption as an intermediate variable,trying to build a theoretical framework that is how "Debt Financing" affects "Perk Consumption",how the "Debt Financing" ultimately affects "Firm Performance",and how the "Perk Consumption" affects the "Firm Performance" Hoping this study can get some empirical results,provide some experience evidence and policy suggest for the ownership structure and corporate governance of Chinese listed companies,and provide an enlightenment significance for the government practice.This research is based on the theory of agency,considering the Chinese special system background,expanded and developed the former scholar's research results,taken 2003?2006 data of Chinese A-share listed companies as the research object,tested the relationship between Debt Financing,Perk Consumption and Firm Performance,then identified how Debt Financing affects Perk Consumption,how the Debt Financing ultimately affects Firm Performance,and how the Perk Consumption.affects the Firm Performance.This research proposed three hypotheses and constructed five multiple linear regression model.The empirical results show that,there is a negative relationship between Debt Financing and Firm Performance.This shows that the corporate governance of listed companies appeared a negative effect of the whole,debt management is a failure.There is a positive relationship between Debt Financing and the level of managerial Perk Consumption,it means when there is more Debt Financing,managers' excessively Perk Consumption behavior is more serious,the managers could obviously suppress more disposable free cash flow,then increase agency costs,and reduce the Firm Performance.Perk Consumption has a significant negative impact on the Firm Performance.This shows that State-owned Companies in China,Perk Consumption is an alternative choice for managers,the overall situation is that managers often seize the benefits of companies through self-motivation,such as Perk Consumption behavior.This method has high costs,it brings positive impact on the Firm Performance,and higher the level of Perk Consumption is,the worse Firm Performance is.This Research enhanced the theoretical basis for future research in this field.It has provided the experience evidence and the policy suggests for the ownership structure and corporate governance of Chinese listed companies,it also has the important enlightenment significance to the government practice.The conclusion of this empirical study also has very important significance for solving managerial agency problem,understanding incentive of salary correctly,and arranging for salary contract reasonably.