The Interaction Study Of Debt Maturity Structure And Corporate Governance

Debt maturity structure and corporate governance are two crucial issues of practice and modern corporate theory. Different maturities of debt play different roles in corporate governance, such as short-term debt can serve to reduce information asymmetry, reduce agency costs, restrain managers and so on, While the long-term debt can inhibit the operators'motives to build the so called "business empire"; However, good internal and external corporate governance mechanisms can also prompt the manager to make a reasonable decision-making of debt maturity structure, protect the interests of corporate investors, and enable the enterprises to get more long-term debt financing in lower costs. And the mutual effects that existing between the two affects the maximization of the companies'value. Nowadays, as China's share structure reform has come to an end, and as well as the debt capital market will gradually come up, corporate governance and debt markets have been highly taken seriously. Therefore, the study of the mutually symbiotic relationship between debt maturity structure and corporate governance has a lot of sense both in theory and practice.In this essay, on the bases of the contract theory and the financing structure theory, using the methods of standardized research and empirical research, we studied the mutual relationship between debt maturity structure and corporate governance. In the part of the standardized research, we analyzed the effects of the debt maturity structure on the agency costs of equity financing and debt financing. Then, we discussed the alternative relationship of the corporate governance on the role of the governance effects of debt maturity structure. In this part, we focused on the analysis of the effects of internal corporate governance mechanism on the debt maturity structure. In the part of empirical research, using the samples of the manufacturing companies in China's A stock market, we conduct an empirical analysis of the debt maturity structure's governance effects. The result is that, in China, the short-term debt does have a positive effect of corporate governance, for it can inhibit the consumption of the incumbent manager. But the relationship between the proportions of short-term debt and the corporate performance are significantly negative. We credit this phenomenon to the China's unsound external governance mechanisms and the extreme imbalance in the debt maturity structure. And second, in the empirical research part, we also tested the effects of the first largest shareholder equity ratio, the proportion of independent directors and the management pay on the debt maturity structure. The result is that the proportion of independent directors and the management pay have a positive effect on the duration of debt. And in the last part, we point out that the perfect mechanisms of external and internal corporate governance are the foundation of the debt maturity structure'governance effects. A perfect corporate governance mechanism can also optimize the arrangement of debt maturity structure.