An Empirical Study Of Capital Structure And Characteristics Of China's Listed Companies

The theory of corporate capital structure deals with the arrangement of financial structure in corporate expansion and retrenchment, namely the determination of the ratio among equity capital, stock and debt to maximize corporate market value. The most important part of the theory is to set up an optimum capital structure for the corporate and to find out those factors that have impacts on the formation of corporate capital structure. Many economists have proved that the industry of a corporate has a great influence on the formation of its capital structure.The economists from developed economies hold that the classification of industries can be a substitute for corporate operational risks. The corporations in a industry tend to have a similar ratio of liabilities due to having similar economic conditions such as similar technologies, circulating capital, the types of guaranty, profitability and grow rate within the industry. Thanks to the same conditions, different industries have different ratio of liabilities. The literature on the relationship between corporate capital structure and the industry centers on the research in large companies in developed economies, especially the companies in USA. Since China is transforming into a market economic system, it is of great importance to explore the relationship between corporate capital structure and the industry. This dissertation aims to examine the relationship between corporate capital structure and the industry of China' s listed companies.In this dissertation, the author argues that industry is a collection of companies with the same features of size, profitability, growth prospect, fluctuation, asset mortgage, asset specificity, time of existence and industrial concentration. These features are actually the conducting factors through which the industry affects corporate capital structure.The unary variance analysis of the ratio of liability shows that the difference in the ratio of liabilities is obvious only in a small number of industries, but not obvious in most industries. The method of industrial classification has little influence on industrial ratio of liabilities and the average ratio of liabilities of different industriesis rather stable in different times.The single variable regressive analysis exposes that the result of 12 relativity tests does not match the horizontal value of relativity R2 well. Namely, the industry has almost no influence on capital structure of listed companies in China. However, different industries have various performance in goodness of fit test, showing that the industry has influence in certain industries.The author applies the multivariate regression model to testing the relativity between asset and liabilities ratio and the index of the industry of the company, size, profitability, growth prospect, asset mortgage and asset liquidity. It turns out that ratio of liabilities has a positive correlation with company size, earning growth and cash liquidity but has a negative correlation with profitability, capital growth, asset mortgage and asset cashablility. The negative correlation of liabilities ratio with asset mortgage conflicts with the theoretical analysis, and the possible reason is that the collateral land use right is excluded from fixed asset in China' s listed companies.The author simulates a non-parametric test established by Scott (1975), by which the results of the former tests are verified.The author testifies the relativity of the industrial features with the industry and found it insignificant for all the eight variables of the industrial features among which asset mortgage is comparatively most significant variable, a common feature that the companies share in the same industry. It also shows the evidence that most industries have a similar feature in asset mortgage.The author employs the research method developed by Saugata (2000) to testify the dynamics of the capital structure of China' s listed companies, the result is unfortunately insignificant.Generally speaking, the industry has an i...