Abstract: How the corporate strategic model affects the economic decision-making of stakeholders is an important but relatively neglected problem in the capital market. Taking China's A-share listed companies from 2007 to 2020 as a sample, this paper examines the impact of internationalization strategy on corporate debt financing cost from the perspectives of risk effect and governance effect. The study finds that the implementation of internationalization strategy can effectively reduce the debt financing cost of enterprises, which supports the governance effect hypothesis of internationalization strategy at the enterprise level. The mechanism tests find that the reduction of corporate earnings volatility, the increasing of the proportion of executives with overseas background and the improvement of innovation willingness are important ways for the internationalization strategy to give play to the governance effect and reduce the cost of corporate debt financing. Further heterogeneity tests show that for enterprises with higher financing constraints and higher product market competition, the implementation of internationalization strategy is more conducive to give play to the corporate governance effect of transnational operation, and then promote the reduction of debt financing cost. This paper shows that internationalization strategy is an important factor affecting creditor debt risk pricing, and the research conclusion is of practical significance to guide enterprises to reduce costs and increase benefits.

Key words: internationalization strategy, debt financing cost, risk effect, governance effect