Debt And Corporate Investment Based On The Ultimate Ownership

Corporate finance and investment have close relationship in the firm. The central issue of Finance is to explore the investment,financing and corporate governance performance relationship. In fact, How the debt affect investment behavior is the way that the debt affect corporate performance.Western scholars have a large number of studies about corporate debt financing and investment relationship and achieve fruitful results. But the background of their research is a mature market economy. In China, the stock market, the governance structure of listed companies, and enterprises is different from Western companies. Therefore, the research conclusions that are to be used to explain the investment behavior of listed companies in China have yet to be empirical test. So debt financing of corporate structure and investment behavior in China will be our Research objectives.Using the data from 2005 to2009, We will study the impaction that debt financing on investment behavior from the angle of the incentive of ownership, property rights and Exercise of the right. Firstly, we construct the framework of the agency that based on the ultimate property by tracing the ultimate controlling shareholder of listed companies. In this framework, we analysis the relationship between the specific characteristics of the ultimate ownership and the agency cost. Secondly, we will study their relationship in the firms whose have different ultimate controlling shareholders by constructin the theoretical model.Then we put forward the study hypothesis. Finally, we will test the hypothesis by building panel data models.The empirical results show that:Debt financing could well inhibit the company's over-investment behavior for the whole listed companies in China. In addition,There is a significant negative correlation relationship between short-term debt and investment behavior. So is commercial credit. But long-term debt and bank credit is almost no effect. From the perspective of the specific characteristics of ultimate controlling shareholder, Compared to the low resolution, government holding company, the central government holding companies, state-owned industrial holding companies and long proxy chain company, we find that there is a stronger negative correlation between debt and investment behavior relationship in high resolution, non-government holding company, the central government holding company, state-owned assets management organizations holding company and short proxy chain company.Finally, we will provide policy recommendations in order to improve the corporate finance structure,standardize the investment and financing behavior of listed companies,improve investment efficiency and promote optimal allocation of economic resources.