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2010•Journal of Changchun University of Science and TechnologyRequires access

Empirical Analysis of Governance Effects of Debt Financing in Listed Company in China

Chu Cheng-bin

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Abstract

To study the influence of debt financing on company's performance,this paper constructs the principal component predicting model of debt financing through principal component analysis,then conducts an empirical study of 710 listed companies in China whose financial data in the year 2008 and 2009 is demarcated by the asset-liability ratio.The empirical results show that the proportion of debt financing of listed company is not as commonly assumed,having a simple linear relationship with the corporate governance performance,but at different rates of assets-liability ratio it showed a different range of correlation.

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What this paper is about

To study the influence of debt financing on company's performance,this paper constructs the principal component predicting model of debt financing through principal component analysis,then conducts an empirical study of 710 listed companies in China whose financial data in the year 2008 and 2009 is demarcated by the asset-liability ratio.The empirical results show that the proportion of debt financing of listed company is not as commonly assumed,having a simple linear relationship with the corporate governance performance,but at different rates of assets-liability ratio it showed a different range of correlation.

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Available abstract

To study the influence of debt financing on company's performance,this paper constructs the principal component predicting model of debt financing through principal component analysis,then conducts an empirical study of 710 listed companies in China whose financial data in the year 2008 and 2009 is demarcated by the asset-liability ratio.The empirical results show that the proportion of debt financing of listed company is not as commonly assumed,having a simple linear relationship with the corporate governance performance,but at different rates of assets-liability ratio it showed a different range of correlation.

Key concepts: Business, Corporate governance, Debt, Liability, Asset (computer security), China, Debt ratio, Finance

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