A Research On Capital Structure And Product Market Competition In Transition Economies

With the theory development of corporate finance, scholars gradually widen the study scope of capital structure, and have paid more and more attention on the inter action between corporate leverage and product market competition. This kind of research has theory value as well as actual business. It builds the linkage between corporate financing, capital structure and the strategy of product market competition, competitive capability. In China's transition economy, the study is helpful to improve the efficiency of capital market and the competence of corporats. In this paper, based on the characteristics of China's transition economy, we have analyzed the general relationship between capital structure and product market competition, and studied how they interacted, as well as the function of ownership structure.China's transition economy has gone through the phases of reform exploring and primary system building. Because there is difference of transition in different areas and industries, we can find that monopoly and competition exist synchronously, as well as lack and excess of competition. The entry of multinational corporations and the development of nongovernmental business have optimized China's industrial organizations, and influenced the market structure. In the mean time, we should realize the discrepancy of capital structure between firms in China's transition period and those in developed countries. There is also no such special ownership structure in other countries. The listed companies universally prefer stock financing instead of debt. These companies have lower leverage. The capital structure of some industries does not match their competition structure and risk characteristics.In this paper the general relationship between capital structure and the extent of...