Debt Financing and Corporate Governance

• Main Authors: Mei-Yen Lee, 李美燕
• Other Authors: Wen-Yeu Wang
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/18219006319365130109

碩士 === 國立臺灣大學 === 法律學研究所 === 103 === Debt financing is one of the important ways for companies to raise fund. Funding decisions are highly related to the function of corporate governance. This thesis begins with the factors of the decision of financing in a company, and analyzes the benefits, the costs, the extent of regulation and the impact on corporate governance. The second chapter discusses capital structure, also with the difference between stock equity and debt financing. The third chapter talks about the main two approaches of debt financing: corporate bond and loan financing, and goes into the important regulation and mechanism of protecting creditors in both legal and contractual system of each approach. The fourth chapter gives an example of Taiwan High Speed Rail Corporation, looks into its ways of debt financing and the effects on this company. There is no common standard for how to use debt to maximize the interest of companies. Because there are conflicts of interest between shareholders and creditors, the concept of maximizing the interest of companies depends on whether the company is in a state of insolvent. To exert the benefit of debt financing, it is necessary to prevent the agency costs of debt. According to the legal regulation and contract pattern of corporate bond in our country, it is very limited for bondholders to interfere the function of company. Considering the cost of financing, issuing corporate bond is a long-term and steady way of financing. Banks are usually the most important creditors of companies. Banks have advantage to monitor debtors. Their reactions release signals to other stakeholders. It is helpful to correct managerial slack of the debtor, and is also helpful to corporate governance. Some clauses meant to protect creditors in the debt covenants could influence the company’s future decision making.