Research On Bond Financing Choice And Its Influence Under The Motivation Of Large Shareholders' Tunneling

Under the motivation of avoiding supervision,the controlling shareholder may make wrong financial decision because of the different supervision efficiency between the bank market and bank loan.The tunneling motivation of different controlling shareholders is different.When the controlling shareholders enter the bond market,with the change of external condition,their behavior may be different.The purpose of this paper is to study the mechanism of action between controlling shareholder's tunneling motivation and previous choice and effectiveness of postmortem supervision in bond market,and try to make contribution to development of Chinese bond market.Based on the data of A share company from 2007 to 2015,setting the separation of two rights as the proxy variable of controlling shareholder's tunneling motivation,combined with the difference between enterprise property rights and corporate governance strength,this paper systematically studies the effect of tunneling motivation on the behavior of corporate bond financing and the change of tunneling behavior after entering the bond market.Regarding the previous choice,applied the Logit model and pooled regression,this paper finds that the stronger the tunneling motivation is,the lower the possibility of market financing is when entering the bond market.Furthermore,the identity of non-private enterprises and group companies weakens the creditors' sensitivity of tunneling.Whether they are from the possibility of entering the bond market or the size of bond financing,the separation of the two powers of large shareholders is not relevant.The negative correlation is significantly lower than private enterprises and non-group companies.Judging from the external governance mechanism,institutional shareholding ratio,the level of bank debt and the improvement of information transparency are several common external governance mechanisms that can increase the likelihood of companies entering the bond market,indicating that there is a certain substitution effect between the external governance mechanism and bond market supervision.The entry of the bond market is a dynamic process.The previous choice of the bond market has proved to be effective,but it is still an empirical problem whether the behavior motivation of the large shareholders will change after entering the bond market.Although previous studies have confirmed that bond financing has many effects on the tunneling behavior of large shareholders,however,the specific mechanism of the impact of bond financing on the behavior of controlling shareholders is not clear.This paper adopts PSM model to control the endogeneity.Taking other receivables as the proxy variable,this paper makes an empirical research on the relationship between the bond market entry and other receivables.The results show that the bond market has a certain inhibitory effect on the tunneling behavior of the large shareholders,but the overall level of significance is not high.In order to test this conjecture,this paper further subdivides the sample and find that the effectiveness of bond financing for large shareholder tunneling behavior governance greatly reflect on private enterprises(high financing constrained companies),non-business group(companies with high transparency)and low growing level enterprises(companies with less investment opportunities).The results show that China's bond market,as an external governance mechanism,is playing a major role in restricting shareholders' tunneling behavior and this effect getting more significant as to the cost of tunneling rises.