Abstract: Debt financing is the primary means for Chinese enterprises to obtain external funds, the cost of debt financing directly affects the operating efficiency of the enterprises. Taking the publishing of The Minutes of the National Conference on Civil and Commercial Trial Work of Courts in 2019 as a natural experiment, this study empirically tests the impact of the horizontal corporate personality denial system on the cost of corporate debt financing by using the data from Chinese A-share listed companies from 2014 to 2023 with the difference in differences method. The results indicate that compared to enterprises with abnormal horizontal related party transactions, the system of horizontal corporate personality denial significantly reduces the debt financing costs of enterprises with abnormal horizontal related party transactions. The mechanism analysis shows that the system of horizontal denial of corporate personality can enhance the confidence of creditors and reduce the risk of debt default for enterprises. Therefore, the system of horizontal denial of corporate personality can reduce the cost of debt financing for enterprises. The heterogeneity analysis found that in enterprises with actual controllers, enterprises where the actual controller’s control rights deviate from ownership, enterprises with legal background executives, and enterprises in regions with good legal system environment, the horizontal corporate personality denial system has a more significant effect on reducing debt financing costs. To this end, it is necessary to strengthen the promotion of the horizontal legal personality denial system, improve its application conditions and implementation rules, continuously optimize the corporate governance mechanism, strengthen the legal awareness of executives, and enhance the confidence of creditors.

Key words: creditor protection, horizontal denial of corporate personality, related party transactions, debt financing costs