The paper utilizes 2013—2014 financial ecological environment evaluation indexes of 247 cities reported by financial institute at Chinese Academy of Social Science in year 2015 and explores the impact channels of governance of local public borrowing on corporate debt financing and investment efficiency of listed firms registered at these cities. Our results show compared to firms registered at regions with better governance of local public government borrowing, corporate leverage ratio for local SOEs measured by total debt, bank loan and longterm bank loan to total asset ratio is significantly higher than that registered at regions with poorer governance of local public government borrowing, but their capital investment efficiency is significantly lower, which means that corporate overproduction issue is obviously serious. The paper provides evidence that governance of local public government borrowing could to a certain extent contribute to the corporate debt financing and capital investment. Through government resource control and economic intervention, there bearing the risk of transferring local public “leverage” into corporate “leverage” by government offbudget borrowings. Our findings provide evidence and also specify the issue that whose “leverage” should be delevered firstly, which has important theoretical and policy implications for understanding microfoundation between governance of local public borrowing and quality economic growth.