The Empirical Study On The Relationship Between Debt Contracts And Tunneling By The Controlling Shareholders

In China, shares of listed companies are relatively concentrated, controlling shareholders in listed companies have strong motivation to encroach the benefits of minority shareholders. What's more, debt contracts are reasonably arranged, which has an effect on the behavior of controlling shareholders. Therefore, according to the special system background in China, this thesis mainly makes researches on how different arrangements of debt contracts affect the controlling shareholders' behavior of tunneling.At first this thesis reviews the basic theories of controlling shareholders'tunneling and debt contracts, then analyzes the domestic and foreign scholars' research status about the tunneling and debt contracts and the mechanism of controlling shareholders' behavior of tunneling which is affected by debt contracts. In terms of the above analysis, the author puts forward the hypothesis of the thesis. In the empirical part, selecting 598 Chinese listed companies from 2004 to 2009 as research sample, this thesis uses embezzling funds to measure the index of tunneling by controlling shareholders and takes multiple linear regression method to test the relationship between arrangements of debt contracts and tunneling by controlling shareholders.The result shows that there is a positive relationship between the overall levels of debt contracts and tunneling by controlling shareholders; there exists positive correlation between short-term debt ratio and tunneling by controlling shareholders; it is negative correlation between long-term debt ratio and the controlling shareholders' tunneling; it is negative correlation between commercial credit and the controlling shareholders' tunneling; there exists positive correlation between bank loans and tunneling by controlling shareholders; the correlation between corporate bonds and tunneling by controlling shareholders fails to pass the test of significance.By the above analysis, this thesis presents some suggestions to improve the debt mechanism of corporate governance according to the actual situation in China.