Proceedings of the 3rd International Conference on Mathematical Statistics and Economic Analysis, MSEA 2024, May 24–26, 2024, Jinan, China

Research Article

Research on Debt Governance, Earnings Quality and Capital Allocation Efficiency

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  • @INPROCEEDINGS{10.4108/eai.24-5-2024.2350207,
        author={Longfeng  Wang and Ting  Chen and Guang  Shu},
        title={Research on Debt Governance, Earnings Quality and Capital Allocation Efficiency},
        proceedings={Proceedings of the 3rd International Conference on Mathematical Statistics and Economic Analysis, MSEA 2024, May 24--26, 2024, Jinan, China},
        publisher={EAI},
        proceedings_a={MSEA},
        year={2024},
        month={10},
        keywords={debt governance nature of property rights debt maturity structure},
        doi={10.4108/eai.24-5-2024.2350207}
    }
    
  • Longfeng Wang
    Ting Chen
    Guang Shu
    Year: 2024
    Research on Debt Governance, Earnings Quality and Capital Allocation Efficiency
    MSEA
    EAI
    DOI: 10.4108/eai.24-5-2024.2350207
Longfeng Wang1,*, Ting Chen1, Guang Shu2
  • 1: State Grid Energy Research Institute Co., Ltd.
  • 2: Beijing Jiaotong University
*Contact email: wanglongfeng@bjtu.edu.cn

Abstract

Debt financing is the company's main source of external funding. As the creditors provided funds to the company, in order to maintain their funds security, they should participate in the corporate governance, supervising and controlling the business management behavior of the enterprise, and exerting the debt governance. This study used the Shanghai-Shenzhen A-share listed companies from 2008 to 2017 as samples, examined the relationship between debt governance and the effect of earnings management on capital allocation in China's capital market. We found that debt governance is affected by the nature of property rights. Compared with non-state-owned enterprises, creditors have higher governance effects in state-owned enterprises and can effectively improve their capital allocation efficiency. Debt governance is also affected by the debt maturity structure. Creditors have higher governance effects in companies with a high short-term debt ratio, and it is difficult for creditors to take part in corporate governance through long-term debt. This study provides evidence for the effectiveness of China's debt market.