A Study Of The Double-high Deposit And Loan Problem Based On Management’s Defense

"Market players are the carriers of economic power,and we must do everything possible to protect them,revitalise them and improve their quality" is one of the important elements of China’s economic work.At present,the rapid development of the socialist market economy has greatly improved the efficiency of China’s capital market,and a large number of enterprises have chosen to raise capital through listing to increase their corporate value and improve their own development,but there are both opportunities and challenges.In recent years,there has been an increase in the number of companies characterised by high levels of both deposits and loans,i.e.both monetary funds and interest-bearing liabilities are maintained at relatively high levels on company statements.This is clearly unconscionable and has led to a number of financial crises,which have not only harmed the interests of small and medium-sized shareholders,but also disrupted the normal order of the stock market,making it urgent to investigate the causes of the double-high level of deposits and loans and prevent countermeasures.The proxy problem between shareholders and management has always been a difficult issue in corporate governance.The management’s defensive behaviour,such as increasing personal control or professional remuneration in order to protect their own interests,is contrary to the requirement of maximising shareholder value and is not conducive to the healthy development of the company,which is likely to be an important cause of the "double-high deposit and loan" problem.Therefore,this paper considers whether there is an inevitable link between management’s defensive behaviour and the high level of savings and loans,and uses a case study approach based on principal-agent theory,information asymmetry theory and rational economic man theory.Firstly,the current situation of Company A and the situation of high savings and loans are explained,and the harm caused by high savings and loans to the company is analysed.Secondly,we analyse the path and mechanism of management’s defences on the high level of savings and loans,and investigate the behaviour of management’s defences in Company A to find out its impact on the high level of savings and loans.Finally,we propose corresponding countermeasures to curb management defences and control the double high level of deposits and loans in response to the specific causes.Through the study of the case of Company A,the main conclusions reached in this paper are: the defensive behaviour of the management of Company A did,to a certain extent,lead to the creation of a double high level of deposits and loans.The combination of over-investment,diversification,high proportion of equity financing and manipulation of monetary funds by the management to enhance job security and gain more profits all contribute to the emergence of the double-high deposits and loans.The economic consequences of Company A’s high levels of savings and loans are detrimental to all aspects of the company’s internal capital management,solvency,financing and growth.Therefore,it is important to pay attention to the problem of double-high savings and loans based on management’s defence,to curb the phenomenon at the source of the company,and to ensure the long-term development of the company by establishing a scientific and standardised investment and financing decision-making system and a positive managerial incentive system,improving the company’s internal control mechanism,strengthening corporate governance and enhancing the company’s internal ethical culture.