Financing Structure of Chinese Listed Companies and its Governance Efficiency

Financing of listed companies is essentially the reassignment of rights of residual contol and residual claim,the way of financing will thus affect stakeholders' interests and behaviors,and finally the governance efficiency of the company.Therefore,a proper financing structure forms the bases of efficient governance.Stimulated by the illusion of free capital,Chinese listed companies show strong preference to equity financing,and form the financing structure of low debt and high equity.Under the circumstance of law efficient capital market,distempered financing institution,and underdeveloped control transfer market,such kind of financing structure enlarges interest conflicts between stockholders and managements,and lowers the governance efficiency. Hence,constructing bond markets,building credit rating systems,and perfecting financing institutions are important to optimize financing structure and improve governance efficiency.