The Research On Corporate Debt Finance

This dissertation gives a deep and systemic research on corporate debt finance. Itincludes: Why is there debt;the role it can play in corporate governance, corporategrowth, and product competition when debt and its various attributes are given;thedetermination and dynamic adjustments of the optimal debt level;the adverseconsequences of debt financing;and the financial systems for corporate debt finance.The structure is as follows:The Introduction presents the necessity of this study, the review of existingpapers of related subjects, the structure, characteristics, and the primary innovations inthis study.Chapter one illuminates the endogenous optimality of the debt contract.Asymmetric information or the incompleteness of the contract makes the optimalfinancing contract has the features which are consistent with the debt contract weobserved in the real world.Chapter two expounds the governance role and governance mechanisms ofcorporate debt to control the manager. The limitations of Chinese banks' role incorporate governance are also investigated.Chapter three analyzes the debt financing features, such as the debt level, thematurity, callability, being convertible, priority, and sources, which firms withabundant growth opportunities should choose. Hence some policy implications arederived for Chinese financing systems. This chapter also includes the influences ofdebt financing on firm's product competition.Chapter four expatiates the impacts of managerial incentives provided by theshareholders on the corporate debt level, credit risk and firm value. Under certainconditions, when the incentives are weak, debt level high enough is the manager'scredible precommitment to his efforts to the outside investors, and the sufficientcondition for the investment project to be fully financed. When the incentives arestrong, however, the manager will choose a debt level that is below the one whichcould maximize the firm value. When the manager's effort is given, the dynamicadjustments of capital structure and the optimal design of callable debt are alsostudied.In chapter five financial distress and its management are concentrated. Thedefinition of financial distress is made. Its costs and predictions are analyzed. Theproblems in the debt reorganization of Chinese ST listed companies are identified,and suggestions of thorough strategic reconstruction are proposed.In chapter six, Two different demand functions of the bank loans are constructedaccording to whether there is corporate bond market in the financing system or not.Then it is proved that the development of corporate bond market can help to reducethe banks' monopoly power. This approach is more maneuverable and less risky thanother theories that dealing with the promotion of Chinese bank's competition. Anothercontent of this chapter is to analyze how the State Holding Banks can be reconstructedto be the joint-stock companies.