Study On The Relationship Between Corporate Governance Structure And Financial Distress

In recent years, financial distress has become an important issue in the economic field. The financial status affects the corporation's running directly and is related to the survival and development of the corporation. So the study on financial distress, especially on the prediction of financial distress appears to be very important.In initial stage when the financial distress was studied, the academia only paid close attention to the financial indices which could predict financial distress. Because the financial indices reflect historical information and earning management exits, people began to find the deeper reasons that caused financial distress. And we can find the deeper reasons theoretically by introducing corporate governance variables to the analysis. Now, the focus of this research is the relationship between corporate governance and financial distress. This study finds that corporate governance affects the financial status and then the probability whether companies will fall into financial distress. So corporate governance variables can help predicting financial distress. Moreover, we can find the methods to improve their corporate governance structure, which makes the companies health. The content and structure of this study is as follows:In the first section, we put forward the meaning, content and innovation of the research. We also review the existing literature and introduce the research structure.In the second section, first of all, on the basis of introducing the concepts of corporate governance and corporate governance structure, we analyze the relationship and difference between them. Second, we introduce the concept of financial distress. Third, we analyze how corporate governance structure affects the probability of falling into financial distress in theory.In the third section, in order to explain the expropriation by the controlling shareholders, we establish a model to analyze the mechanism, by which the separation of control rights and cash flow rights affects the probability of falling into financial distress.The fourth part is the empirical research about the effects of the corporate governance structure on financial distress, which consists of selecting testing samples, choosing variables and establishing the regression model and analyzing results.The last section explains main conclusions of this research, and gives the policy proposals correspondingly.