Financing Structure And Corporate Governance Of Private Enterprises

China's Private Enterprises have been an unprecedented development since reform and opening up, and the proportion of it in the national economy is keeping growing. As the legal system, the constraints and the barriers which Private sector enterprises are faced with are reducing gradually, private sector enterprises have access to bigger and bigger filed and the development of private enterprises are faced with a golden opportunity. However, when the private enterprises are in upcoming high-speed growth, it has to face the vexed question of corporate governance. This displays mainly in single and closed property, combination of ownership and management rights, centralized management and the lack of scientific and standardized decision-making mechanism, "bedfellows" mechanism, nominal board, and lack of effective supervision and restriction mechanism, weak governance external.According to the financing structure and corporate governance theory, the structure of property rights is the foundation of corporate governance and the ownership structure depends on the financing structure. With an increasingly important role the private economy played in the development of the national economy, exploring the issue of corporate governance and financing structure through optimizing the financing structure, improving corporate governance structure and increasing the company's operating efficiency is very realistic significance.The relation between Capital structure and corporate governance principally comes from the equity governance and debt governance. Shareholding structure is the basis of corporate governance structure, and it decides the power core of the board of directors, that is to say it decodes board of supervisors and managers. Equity governance works mainly through the supervision of board, supervision of the major shareholders, the agency for the withdrawal and the takeover mechanism. Effectiveness of the equity governance depends on the shareholders nature, the capital markets and the factors of manager market. Debt governance can play an effective role to supervise and regulate the operator because the debt is a binding budget constraint. This constraint is "hard constraints" which manifests mainly due to repaying the principal and interest, which reduce the free cash dominated by manager. The validity of governance of debt is impacted by various factors, and it can play a role on the assumption that there are effective bankruptcy mechanisms, effective market of transferring property rights, and that creditor has the ability and power monitor the behavior of enterprises. In short, debt...