The constraints of debt financing on managers are mainly manifested in the following four aspects: first, corporate debt financing will reduce the company's investment ability. Second, the debt constraint aggravates the possibility of bankruptcy. Third, the role of debt financing in limiting the company's invalid investment is related to the company's industry characteristics. Fourth, creditors can easily observe the company's past record of repaying loans. In short, debt will force managers to distribute the cash income of enterprises to investors in time, rather than squandering it themselves; Debt will also force managers to sell bad assets and restrict managers from making invalid investments that can increase their power; When the debtor is insolvent or the enterprise needs financing to repay the due debt, the creditor will investigate the financial situation of the enterprise according to the debt contract, which will help prompt the information of the enterprise and better restrain and supervise the managers.

legal ground

Article 4 of the Interpretation on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund-raising

Whoever commits the acts listed in Article 2 of this Interpretation by fraudulent means for the purpose of illegal possession shall be convicted and punished for the crime of fund-raising fraud in accordance with the provisions of Article 192 of the Criminal Law. Illegal fund-raising by fraudulent means can be regarded as "for the purpose of illegal possession" under any of the following circumstances: (1) After fund-raising is not used for production and business activities, or it is obviously disproportionate to the scale of fund-raising, so that the fund-raising cannot be returned; (two) wantonly squandering fund-raising, so that the fund-raising can not be returned; (3) fleeing with funds; (4) The funds raised are used for illegal and criminal activities; (5) Evading, transferring funds, concealing property or evading the return of funds; (six) concealing or destroying accounts, or engaging in fake bankruptcy or bankruptcy to escape the withdrawal of funds; (seven) refused to account for the whereabouts of funds, to escape the return of funds; (eight) other circumstances that can be identified as the purpose of illegal possession. The purpose of illegal possession in the crime of fund-raising fraud should be determined according to the situation. If part of the illegal fund-raising behavior of the actor has the purpose of illegal possession, the fund-raising involved in this part of illegal fund-raising behavior shall be convicted and punished for the crime of fund-raising fraud; If the center of the crime of illegal fund-raising has the purpose of illegal possession and other actors have no intention or behavior of illegal possession of fund-raising, the actor with the purpose of illegal possession shall be convicted and punished for the crime of fund-raising fraud.