A Study On Ultimate Control Rights And The Governance Effect Of Debt Financing In Listed SMEs Companies

With the development of the corporate governance theory, debt financing is also beingseen as a way of corporate governance. The incentive constraint effect, signal transferring effect,control rights effect and agency cost effect of debt financing plays a very important role oncorporate governance. But research from the ultimate control to governance effect of debtfinancing is still less. The multi-level control structure cause ultimate controlling stockholdersthrough less cash flow to acquire greater control. It remains to study what role of ultimatecontrol play in the governance effects of debt financing. Currently, Small and medium-sizedenterprises (SMEs) are development rapid, SMEs are the important part of Chinese economics,but the financing problem restricted the development of SEMs. We should concern thegovernance effect of debt financing. The research on ultimate control rights and the governanceeffect of debt financing in listed SMEs Companies has important theoretical and practicalsignificance.Based on the theoretical studies, we select listed companies which were listed a smallboard and the GEM of the Shenzhen Stock Exchange in the2009-2011as samples, therelationship between the ultimate control and governance effects of debt financing. The studyfound that:(1) positive effect of debt financing governance in listed SMEs will be decreasedand then increased with the improvement of the proportion of control;(2) ultimate control cashflow rights has a positive effect on the proportion of governance effects of debt financing;(3)the greater degree of deviation between control and cash flow rights has more negative effect ofdebt financing governance;(4)the more level of the ultimate control has more obvious negativeeffect of debt financing governance;(5) the non-state-controlled listed companies who use debtfinancing to play the role of governance are superior to the state-controlled listed companies;(6)debt financing ratio has a negative effect on the corporate governance.The thesis consists five parts as follows. The first part is the introduction. The research onthe background, significance, contents, methods and weakness of the thesis are concluded. Thesecond part is literature review. We trace the theory of ultimate property rights and control right,the theoretical and empirical studies of governance effect of debt financing and the research ofgovernance effect of debt financing base on ultimate control right. The third part is theoretical analysis and hypotheses. We introduce the concept and relation concept of ultimate controlright and post effect and negative effect of debt financing governance, analyze the relationshipof governance effect of debt financing with the ratio ultimate control, the ratio of cash flowrights, the separation of ultimate control and cash flow rights, the level of ultimate control andthe nature of the ultimate and propose the assumption. The fourth part is empirical research.Through the descriptive statistics, correlation analysis and regression examine to acquireconclusion based on the third part. The finally part is the empirical results, research proposalsand research prospects. We summarize the results of empirical research, proposedcountermeasures and suggestions through restrict ultimate controller to optimize governanceeffect of debt financing and put forward the problem not solved.