Convertible Debt Managers Control Over The Influence Of Private Income

In China’s listed Corporation, owner vacancy phenomenon due to internal managementactual control of the inflow of enterprises not held or small holding hands, managerstend to use the control right to grab the private benefits of control, thereby infringing theinterests of shareholders. Therefore, this paper discusses how to choose the financingway to the rational allocation of corporate control rights, so as to implement effectiveincentive and restraint on the management, has become an urgent problem in areasunder the background of new era of corporate governance in china. In recent years,convertible bonds market developed rapidly in our country, the financing of convertiblebonds and equity financing and debt financing is the another main financing way. In thisbackground, this paper analyzes the role of debt financing on corporate governance,focusing on convertible bond financing for private benefits of control rights manager.We choice in2002and subsequent years for the issuance of convertible bonds companysample as the original sample, carries out the factor analysis factors of private benefitsof control effect on managers, the main effect factors, and then study these factors onthe effect of private benefits of control rights manager. The empirical results show that:the inertia factor, capital structure and company supervision factor and managementcontrol relationship between private benefits positively; cash flow factor andmanagement of private benefits of control showed a weak negative correlation between.Then this paper focusing on the convertible bond financing on the governance effect ofprivate benefits of control rights listing Corporation manager, this paper selects69usingempirical data can be listing Corporation convertible bonds and the correspondingcontrol group company data. On the issuance of convertible bonds after two years ofmanagerial control level were compared after the discovery of self-interest, themanagement’s on-the-job consumption level and the level of free cash flow areimproved. In contrast to the use of equity financing and debt financing listingCorporation, the listing Corporation management mode and convertible bondson-the-job consumption level and free cash flow is in the lower level. These resultsshow that listing Corporation use convertible bonds financing mode certainly caneffectively reduce the level of private benefits of control.The conclusions of this paper give us the enlightenment, the issuance of convertiblebonds of listing Corporation have corresponding to equity, this right contributes to corporate control signal according to the performance of different dynamic transferbetween different subjects, which can effectively restrain the management behavior,reduce the management level of private benefits of control, avoid losing or reducingcontrol right because of poor business performance. This fully shows that convertiblebond financing is not only a kind of financing way, it can also further improve the levelof corporate governance, inhibit managers control play a positive role in self-interest.