The Theory Of Capital Structure And Financing Tool To Select

The study of capital structure shows that a company's financing structure does affect its value. That is, the values of the "pizzas" do depend on how they are sliced. The financing decision, i.e. the behavior and the financing instruments chose by a company not only reflects the financial conditions and investment opportunities which the company faced with, but also shows other factors such as the consideration of control rights by the company's insiders and the financial environments which the company confront with. This dissertation applied both the theoretical analysis and the empirical method to mainly study the behavior and the choice of financing instruments of Chinese listed firms. Firstly, as the basis of the study, I surveyed the newly development of the theory of capital structure. Then I studied the main determinants of the leverage ratio of Chinese listed companies by applying a series of hypothesis implied by some branch theory of capital structure. This empirical analysis used the methods of factor analysis and regression?a two step model and got some interesting results. Secondly, I gave some theoretical explanation for the financing behavior of Chinese listed firms after studying the changes of institutional environment which Chinese listed firms experienced. Thirdly, by providing a general background of typical as well as some newly developed financing instruments which a company may used in developed capital market, I analysis the financing instruments choice of Chinese listed firms by the way of compared case study. Finally, the major techniques of corporation restructuring and the financing arrangement in it, as well as its application in China's situation were also studied, and some typical cases was also used in this part. By this dissertation, I try to not only add some views on current theoretical literature about financing problem of Chinese firms, but also give some guidance in the practice of corporate financing in China.