Research On State Grade Control, Capital Structure And Agent Problem

State-owned economy is a dominant part in our national economy. And as the primary organizational entities in state-owned economy, state holding enterprises play a vital role in the economic development in our country. How to perfect the governance structure of state holding enterprises, and how to reduce their agency costs are momentous matters that not only pertain to state holding enterprises themselves, but also pertain to the development of national economy as a whole. Corporate capital structure is the vital part of corporate governance structure, which regulates the allocation of corporate control, as well as the arrangement of residue claims for enterprises. How to solve the agent problem of managers and controlling shareholders in state holding enterprises through perfecting capital structure is a forefront research subject in the field of corporate governance that gains great attentions.On the basis of literature review of related research fruits home and board, and under the analysis framework of incomplete contract theory, this paper makes comprehensive use of the latest research fruits in modern economics, such as stakeholder theory, the property right theory, the principal-agent theory, and combines the methods of normative research and empirical research. Meanwhile, following the research clue of"institutional background—theoretical analysis—empirical analysis—countermeasure research", this paper makes a all-rounded and deepened research on the subject of"state grade control, capital structure and agent problem"and gets several view points and conclusions of theoretical and practical value.Firstly, this paper establishes the analysis framework of capital structure's impact on agent problems in state holding companies based on the incomplete contract theory. The theoretical foundation of previous analysis of capital structure's influence on agent problem is complete contract theory. However, under restrict assumptions, complete contract theory suggests that every related question in future can be described in contracts, every related matter can be solved by negotiation in advance. This is unrealistic and unable to give reasonable explanation to capital structure's influence on agent problem. The incomplete theory developed by Grossman and Hart (1998), Hart and Moore (1990) suggests that when contracts are incomplete, the questions of who owns the assets and who has the right to control the assets, etc., are of vital importance. It is focused on the optimal arrangement of residue claims and corporate control. The proper allocation of residue claims and corporate control between stakeholders such as shareholders, creditors and managers is the key to improve operation efficiency and decrease agent costs. Therefore, the incomplete contract theory makes direct analysis on agent problem and reaches the essence of the question from the angel of corporate control, and thus, it is a useful tool in analyzing the issue of corporate governance of state holding enterprises. This paper is based on incomplete contract theory and finds that unreasonable capital structure will lead to asymmetric arrangement of residue claims and corporate control in stakeholders, which is the origin of the agent problems in state holding companies.Secondly, on the basis of theoretical analysis, this paper adopts data from our state holding listed companies and carries out empirical analysis on agent problem under the situation of state grade control. Due to the status que of grade control of state holding listed companies, state holding companies can be categorized as central government holding listed companies and local government holding listed companies. The series of significant differences in governance characteristics and agent problem of these two kinds of companies were been systematically discussed. Based on the difference in establishment path of these two kinds of state holding listed companies, the empirical research in this paper finds that there are differences in agent problem for state holding listed companies in different grade of control: central government holding listed companies mainly face the agent problem between controlling shareholders and small-and-medium shareholders, whereas local government holding listed companies mainly face the agent problem between controlling shareholders and managers.Lastly, this paper constructs new measuring index for agent costs, and makes analyses on capital structure's influence on agent problem in state holding enterprises. Contra posing the limitation of previous measures for agent costs, this paper estimates corporate normal expenditure by regression model, and then takes regression residual as the replacing variable for agent costs. It takes state holding listed companies as research objects, does empirical researches and finds that capital structure is significant factor in capital structure's influence on agent problem in state holding enterprises, meanwhile, there are differences in agent costs for state holding listed companies in different grade of control.