A Study On The Impact Of Board Diversity On Debt Financing

Companies are financing to meet their development needs,and debt financing has been an important financing option for many companies.Reducing the financing cost of debt and arranging the debt financing structure reasonably are the key points in the company's financing decisions.It is also a problem that China's capital market urgently needs to solve.As the core of corporate governance,the board of directors not only undertakes the task of upgrading and monitoring the strategic management of the company,but also bridges the connection between the company and the external environment.The governance mode of the board of directors has become a key factor influencing the formulation and implementation of the financing plan.The traditional theory of corporate governance is based on the rational person hypothesis that the top management team is homogeneous and can make entirely rational decisions.And according to the "Company Law" in our country,the structure of the board of directors is mostly similar,however,the financing decisions of the same industry companies are quite different.The top echelon theory suggests that the psychological factors such as cognitive ability,perception and values of top management team influence their decision-making,and the decision-making is not completely rational.Board features include observable aspects(demographics)such as gender,job backgrounds,and unobservable aspects(personality)such as personality and character.Therefore,the diversification of the characteristics of the board determines the heterogeneity of the directors' ability and so on,thus affecting the company's debt financing decision-making.Based on this background,this article uses the OLS regression model of the non-ST non-financial A-share listed companies in Shanghai and Shenzhen stock markets from 2008 to 2016 to empirically test the diversified features of the board of directors including gender,career background,financial background and social capital diversity on corporate debt financing.The study found that gender diversity,financial background diversity and social capital diversity of the board have a positive impact on bank loans,gender diversity,career background diversity,financial background diversity and social capital diversity of the board all have a positive impact on debt maturity structure.Gender diversity,financial background diversity and social capital diversity of the board can reduce debt financing costs.Further under the circumstances of differences in the company's leadership structure and external financing environment,this paper studied the effects of board diversity on debt financing.The study found that only when the chairman and CEO is not the same person(the separation of the two rights),the board diversity will affect the debt financing.When the chairman and CEO serve the same person(one of two positions),gender diversity,financial background diversity and social capital diversity of the board will not result in the debt financing,career background diversity of the board has a negative effect on the debt maturity structure.In a poor financing environment,the board's gender diversity,career background diversity and financial background diversity can significantly increase the company's debt financing capacity.The board's social capital diversity only has a positive effect on the company's bank loans and debt maturity structure when the financing environment is good.This article revealed the impact of board governance factors on debt financing and combines China's national conditions and provided a reference for listed companies to optimize the structure of the board of directors and make a reasonable debt financing strategy.