Study On Capital Structure And Enterprise Value Of Chinese Listed Companies

From theory MM, papers about capital structure are always focused on three questions, one of which is the effect of capital structure on enterprise Value, one of which is whether there is optimal capital structure, and another of which is the factors influencing capital structure. In fact, the essential start of three questions is whether enterprise value is relative to capital structure. From MM to 1960s, the existence of optimal structure has been approved from various angles in western capital structure theories and a great deal of empirical study supports different views, including principal-agent theory, signaling theory, and control-based theory. Further more, the conclusion of capital structure affecting enterprise value is affirmatory.Along with the development of capital theory, people realised capital structure is not only the static basis of cash distribution, but also hides corporate control rights. The ratio of equity and debt will decide the corporate control rights, which are the decision-making rights. Capital structure and control rights will be changed through control transfer if they are not matched efficiently. So, the control transfer can restrict capital structure and improve enterprise value.This paper will make a detailed research on the relationship of capital structure and enterprise value, aiming to settle an important problem "how does static and dynamic capital structure affect on enterprise value" .There are many papers on capital structure, but most of them focus on narrow-sense and static capital structure. This paper will proceed with broad-sense, and put equity and debt into a unitive frame, analysing the influence of static equity, debt, and the interaction of them on enterprise value. Then by selecting domestic listed samples, this paper makes a positive study to testify the effect of static capital structure on enterprise value. By virtue of dynamic capital structure, this paper analyses how control transfer influences enterprise value. Following theory analysis, this paper selects control transfer samples, making an empirical study to testify the effect of dynamic capital structure on enterprise value. Through the analysis of relationship between static capital structure and enterprise value, we find that different equity holders, different equity concentration, different debt structure and different debt maturity have different effect on enterprise value. In contrast with high and low equity concentration, moderate equity concentration may be more advantaged to improve enterprise value. Bank debt has more powerful restriction than corporate debts, short-maturity debt improves enterprise value mainly by supervise effect, and long-maturity debt improves enterprise value mainly by tax shields. The interaction of equity and debt influences enterprise value inter-complementary which means that concentrated equity is relative to concentrated debt, dispersive equity is relative to dispersive debt, and powerful restriction of equity is relative to powerful restriction of debt.After the analysis of mechanism that static capital structure affects enterprise value, the fourth chapter carries out a positive study to testify the effect of static capital structure on enterprise value, and draws some important conclusions. At present, state-owned equity is too high, which has negative effect on enterprise value; moderate concentrated corporate-owned equity is advantageous to improve enterprise value, while circulating equity is inapparent to improve enterprise value; managerial equity has positive and negative effect on enterprise value, which is too low and noneffective now. The relation of largest holder's equity and enterprise value is cubic, so moderate eqity concentration is better. The relation of leverage and enterprise value is quadratic, and long-maturity debt is more advantaged to supervise manager to improve enterprise value in contrast with short-maturity debt, which is opposite to theoretic conclusion. In additon, concentrated equity is coexistent with dispersive debt, which means that equity and debt is not inter-complementary. The interaction of debt and state-owned equity has negative effect on enterprise value, while the interaction of debt and circulating equity has positive effect on enterprise value. Corporate size has positive effect on enterprise value, while capital cost has negative effect on enterprise value.Taking control transfer for exaqmple, this paper analyses dynamic capital structure influences enterprise value, and find that enterprise value is improved distinctly after control transfer. In additon, there is much difference between payed transfer and nopayed transfer, there is no difference between partly transfer and total transfer, and there is no difference to affect EV when new large-holder' s nature is defferent.Following theory analysis of dynamic capital structure affecting enterprise value, this paper selects control transfer samples, making an empirical study to testify the effect of dynamic capital structure on enterprise value, and draws some important conclusions. Firstly, CROA is improved distinctly after control transfer, and other indexes haven't showed this character. Secondly, payed transfer and total transfer can improve corporate ROE more efficiently. The last and the most important, the index ROE is the most sensitive to control transfer, the index TQ is not regular, and the index CROA is the most moderate.Finally, on the basis of theory and empirical study, this paper gives some suggestions. We should build reasonable equity and debt structure, by reducing state-owned equity, by speeding up circulation of stock. We should open the door to capital market, increase corporate leverage, strengthen the interaction of equity and debt, and optimize dynamic capital structure. We should adopt more market control transfer to improve enterprise value.