The effect on equity structure of listed company in debt financing is a mechanism, which can be analyzed from the perspective of the interaction between debt financing and equity structure. The change of equity structure led by the change of liabilities ratio in turn contributes to the change of companies' performance. By the empirical study on domestic listed companies, the paper concludes that the effect on equity structure of listed company in debt financing is very weak and the action is negative. The effect not only cannot promote companies' performance, but also acts as an adverse factor. The conclusions correct the traditional theory of financing structure that believes debts can promote companies' performance by optimizing equity structure.