At present, the main ways of protecting the interests of creditors include adjusting the new debt scale, reducing the interest rate and adjusting the debt capital cost. In this paper, from a new perspective of the principal-agent, this article tries to explore whether the internal control can protect the interests of the creditors. Through the study, we found that the higher the quality of internal control of listed companies, the less the occupied money by assets substitution of controlling shareholders.
Cite this paper
Huang, W. and Long, P. (2015) Internal Control, Asset Substitution and Creditor Protection. Modern Economy,6, 484-489. doi: 10.4236/me.2015.64047.
|||Xiao, Z.P. and, Liao, L. (2007) Major Shareholder, Creditor Protection and Corporate Debt Maturity Structure Choice. Management World, 10, 99-113.|
|||Jensen, M. and Meckling, W. (1976) Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3, 305-360. http://dx.doi.org/10.1016/0304-405X(76)90026-X|
|||Myers, S. (1977) Determinants of Corporate Borrowing. Journal of Financial Economics, 5, 147-175. http://dx.doi.org/10.1016/0304-405X(77)90015-0|
|||Smith, W. (1979) On Financial Contracting: An Analysis of Bond Covenants. Journal of Financial Economics, 7, 117-161. http://dx.doi.org/10.1016/0304-405X(79)90011-4|
|||Jeffrey, D. and Weili, G. and Sarah, M. (2006) Determinants of Weaknesses in Internal Control over Financial Reporting and the Implications for Earning Quality. Accounting Horizons, 5, 67-75.|
|||Li, X.H. and Yang, Z.X. (2013) The Quality of Internal Control and Creditor Protection, Based on the Perspective of Debt Contract Characteristics. Audit and Economic Research, 2, 97-105.|
|||Jiang, W. and Shen, Y.F. (2005) Big Shareholder Control, Asset Replacement, and Creditor Protection. Study of Finance and Economics, 12, 95-106.|
|||Li, J.L. (2012) Information Disclosure of Investor Protection Effect Research. Jinan University, Guangzhou, 23-26.|
|||Heather, M.H. (2000) An Analysis of the Demand for Reporting on Internal Control. Accounting Horizons, 3, 325-341.|
|||Chen, J. and Xu, Y.D. (2012) Executive Compensation Incentive Will Focus on the Creditors’ Interests—City of the Company’s Debt Maturity Constraint Perspective Empirical Evidence. Accounting Research, 9, 73-82.|
|||Yang, D.M. and Feng, X. (2011) Bank Loans and Debt Maturity and Internal Control of Listed Companies. Journal of Shanxi University of Finance and Economics, 8, 44-50.|