The Empirical Study On The Impacts Of Chinese Listed Companies' Debt Financing On Agent Costs

Social division of labor leads to the separation of ownership and management right,resulting in the principal and agency relationship.Because of the conflict of interests and information asymmetry between the principal and agent,the agent often makes a violation of the intention of the principal,which leads to the damage of the principal's interests,thus producing the agency cost.At present,the cost of agency between the owners and managers of listed companies remains high,which seriously damages the interests of the shareholders.It is of great practical significance to study how to reduce the agency cost.Agency cost is affected by factors such as corporate governance,and debt financing has a certain effect of corporate governance,which is an effective way to solve agency cost problems.However,domestic and foreign scholars have not reached agreement on whether debt financing can reduce agency costs.Therefore,it is particularly important to study the influence of debt financing on agency cost.As a kind of financing method,debt financing has the effect of bankruptcy threat and corporate governance effect of restricting the free cash flow of debtors.So it can play a role in corporate governance to a certain extent.Debt financing can not only supervise the managers,but also can restrain the managers in the company.Debt financing can influence the managers' behavior,and plays an important role in reducing agency cost.Therefore,the relationship between the debt financing and the agency cost is influenced by the manager's behavior,which makes the executive stock have a long-term incentive to managers,and it can promote the managers to work harder on the basis of the debt financing effect,thus strengthening the reduction of the debt financing to the agency.The role of debt financing of different maturities in reducing agency costs may also have some differences.Therefore,it is of great significance to study the effect of debt financing level on agency costs,examine the regulatory effect of executive equity incentives on the relationship between debt financing and agency costs,and explore the impact of different-term debt financing on agency costs.This paper is based on principal of agency theory and capital structure theory.It analyzes the present situation of debt financing and agency cost.Based on the data of the listed companies in China for 2014-2016,this paper studies the influence of debt financing onagency cost.The conclusion of this paper is as follows:(1)The level of debt financing of listed companies has a significant negative correlation with agency cost.Debt financing can play a governance effect to reduce agency cost at the overall level.(2)Senior management equity incentive can regulate the relationship between debt financing and agency cost,and the interaction between senior management equity incentive and debt financing can strengthen the reduction of agency cost.(3)There is a significant negative correlation between short-term debt financing and agency cost,that is,short-term debt financing can play a governance effect to reduce agency cost.(4)Long-term debt financing has a significant positive correlation with agency cost,that is,improving long-term debt financing can not exert the governance effect of reducing agency costs.According to the empirical results,this paper puts forward the following countermeasures to reduce agency cost.Firstly,enterprises should reasonably allocate their financing structure.Secondly,it should strengthen the supervision role of creditors.Thirdly,the relevant laws and regulations should be improved.Finally,the company should increase the executive equity incentive,and our society should improve the market of managers.The research of this paper can not only help the listed company solve the agency cost problem,but also help the company healthy develop continuously.