Capital Structure and Agency Costs

How capital structure influence corporate agency costs is an important area in the research on capital structure. This paper takes the state-controlling listed companies and private listed companies over the year between 2000 and 2005 as research objects and make analysis on this question. The results of empirical research shows the agency costs is lower in private listed companies than in state-controlling listed companies and the capital structure is the one that makes differences. The significance in policy of this conclusion lies in that perfect capital structure is conducive to improve the governance structure of China listed companies and decrease agency costs, and that Chinese government should further promote the reform for privatization so as to improve the quality of listed companies in China.