Research On The Relation Between Corporate Control And Capital Structure Of Listed Companies In China

Company's capital structure is an important theoretical issue of contemporary finance. Since MM theorem proposed by Modigliani and Miller, western scholars have continued to develop capital structure theory . At the end of the eighties and the early nineties in the 20th century, capital structure theory and market for corporate control theory blended together, and the school of capital structure management control formed. After this, capital structure selection, which taking into account the factors of corporate control, has become an important issue in the academic field. With gradual completion of the split share structure reform, listed companies in China will enter a full circulation time, the market for corporate control will be further improved. Therefore, there exists realistic background and soil for exploring optimization problem of capital structure of listed companies in China from a corporate control point of view. With reference on thought of the school of capital structure management control, this paper examines the relationship between corporate control and capital structure of listed companies in China, and provides a new perspective and idea to optimize capital structure and improve corporate governance performance.First of all, this paper reviews market for market control theory, capital structure theory, and capital structure control theory. Followed by this, it further researches the characteristics of capital structure and market for corporate control of listed companies in China and the underlying root causes of system. Then, from both static and dynamic point of view, the relationship between capital structure and corporate control of listed companies in China is examined by theoretical and empirical analysis . The main conclusions are as follows:First, allocation of corporate control depends primarily on capital structure decision-making, and more importantly, allocation of corporate control plays a major impact on capital structure decision-making, which is tested by theoretical and empirical analysis. Empirical tests have shown: whether state-owned listed companies or private ones in China, the discrepancy between control right and cash flow right is positively related to the rate of total debt to total asset; the impact of this discrepancy on capital structure is due to the nature of ultimate controller of listed company; the assumption that manager ownership is positively related to debt ratio does not hold; Degree of equity balance is negative related to debt ratio.Second, there exists an interaction mechanism between corporate control contest, transfer and capital structure decision-making. By comparing optimal capital structure selection models under different cases, it is found that when the company faces the threat of takeover, its optimal capital structure is different from the case that the threat doesn't exist. On this basis, empirical test is made to find the impact of capital structure of listed companies in China on probability of corporate control transfer. Specifically, the rate of total debt to total asset is negatively related to the probability of corporate control transfer; corporate profitability, operational capacity, growth capacity and corporate size are negatively related to the possibility of corporate control transfer; the higher the ratio of market price to net assets, the more easier corporate control transfer.At the end of this dissertation, relevant policy recommendations are given to improve external governance mechanism and optimize capital structure based on the conclusions of theoretical and empirical analysis.