Profitability And Capital Structure Under Managerial Self-Interest

Corporations' capital structure is a question for discussion which is payed attention to long by finance academe and corporation managers, is also one of the important contents on corpotation finance study. These theories on capital structure in existence could be identified to four categories of determinants of capital structure: models based on agency costs, models based on asymmetric informations, models based on corporate control considerations and models based on product/input market interactions. These theories on capital structure which are put forward are mainly based on hypotheses on corpotations' environments and analysis about corpotations' conflicts. The researchs of every capital structure theories mainly describe some factors that determine the capital structure on one side. Commonly, there are different conflicts in different market economy environment, so there are different factors which determine the corporation capital structure.These literature about models based on corporate control considerations in the near future mostly study start from affects on capital structure which managers conside self benefits, its background of research is resemble with the real situation which those managers of Chinese listed companies are fact controler and managers' benefit badly affect profitability and capital structure. However, there are many differences between those literature mostly based on west developed market economy with the market enviroments in existence in China. Especialy the obvious differences on source of managers' benefit and condition on corporation financing restrict would affect the conclusion on capital structure in China. These literature in existence about capital structure characteristic of Chinese listed companies mainly carry empirical study, there are less theoretic study which could consider Chinese market characteristics. In a word, capital structure theories in existence could not entirely explain the influence on profitability and capital structure of Chinese listed companies which were made by managers' self-behavior. About the relation between capital structure and profitability, there are different conclusions in different theoretical models and emperical studies. Otherwise, those conclusions were different about how such factors affected capital structure as corporations' size, fixed assets and stock price. So we think there need farther study on such problems.