The Capital Structure And Investment Efficiency In China’s Steel Industry:the Perspective Of Supply-side Reform

In recent years,China’s economic growth has gradually slowed down and started to enter the "new normal" of economic development.While at the same time,a series of social contradictions have also been exposed,such as the imbalance between supply and demand,weak private investment and overcapacity.To this end,the country has introduced supply-side structural reform since 2015,aiming to reduce low-end and ineffective supply from the supply side,eliminate excess capacity and improve total factor productivity.Micro enterprises are the main body of social supply,and their supply efficiency is directly related to the success of supply-side reform.Therefore,the investment efficiency of enterprises has been widely concerned.On the other hand,the problem of high leverage is closely related to inefficient investment and excess capacity.Frorm the perspective of enterprises,the decision on capital structure is one of the most important financial decisions of enterprises.However,the high asset-liability ratio has become an important factor that hindering the development of enterprises.Thus,it is imperative to optimize capital structure.In this context,in order to provide inspiration and reference for improving the investment efficiency of enterprises,this paper directly studies the change of capital structure and investment efficiency,and then investigates the relationship of them.Based on the data of China’s listed manufacturing companies from 2003 to 2017,this paper makes a detailed descriptive analysis about the current capital structure and investment efficiency at first,and then investigates the relationship between the capital structure and investment efficiency.The results show that:(1)China’s manufacturing industry show an obvious trend of deleveraging on the whole,but the steel industry has been increasing leverage,and the deviation degree between the actual capital structure and the optimal capital structure of the steel industry is increasing;(2)China’s manufacturing industry generally show a trend of declining new investment and improving investment efficiency,but the investment efficiency of the steel industry is more volatile than that of other industries.(3)there is a clear correlation between the capital structure and investment efficiency:for enterprises with low initial debt ratio,a moderate increase in the asset-liability ratio is conducive to improving their investment efficiency;However,for enterprises with already high debt ratio,further increase of the asset-liability ratio will seriously worsen their investment efficiency.The structure of this paper is as follows:the first part introduces the background and significance of the topic;The second part are literature review and the theoretical introduction related to the research topic;The third part makes a descriptive analysis about the capital structure and investment efficiency;The fourth part is the case analysis;The last part sums up the main conclusions of this paper and puts forward some suggestions.