On Capital Market And Corporate Capital Structure

From the point of view of corporate financing, this paper systematically discusses how to develop capital market to regulate corporate financing behavior as well as meet the requirement of corporate financing under the condition of transforming economy.First, this paper theoretically analyses the basis of corporate financing decision. Corporate capital structure refers to debt /equity ratio. Financing structure determines capital structure, and the reasonability of the capital structure affects the enterprise's market value. Thus, to build up an appropriate capital structure becomes the base of the enterprise financing decision, and the capital market's regulation on corporate financing behavior is reflected on the optimization function of capital market to corporate capital structure.Second, this paper analyses the optimization function of capital market to corporate capital structure. Capital market consists of stock market, corporate bond market and long and middle term credit market. The capital market not only offers the enterprises a lieu for financing, but also promotes the optimization of the corporate capital structure by the particular pricing mechanism and motivation -constraint mechanism.The pricing mechanism of stock market makes share price reflect the relationship between risk and benefit of ownership financing. An appropriate price impels enterprises in financing decision to arrange their financing structure according to the different risk and cost of financing channels. The empirical analysis indicatesthat the pricing mechanism of Chinese stock market is not perfect makes the public companies prefer ownership financing. As a result, the balance ratio of public company is low.Being the institutional arrangement for corporate financing, capital market offers motivation-constraint mechanism for corporate financing. The stock market performs its motivation-constraint function by equity future, "vote by hand" and "vote by foot". The credit market regulates the enterprises financing by credit ration. By the above way, the capital market not only protects the benefits of the investors, but also urges enterprises to finance in terms of market rule and promotes the optimization of the corporate capital structure by the principle of maximizing their corporate values. The empirical analysis indicates that the motivation-constraint mechanism is not perfect in Chinese stock market, and the constraint mechanism is not strong in Chinese bond market and the development of Chinese corporate bond market is too slow ,which make the non-public companies prefer credit financing. As a result ,the balance ratio of non-public company is highFinally, aiming at the above problems in Chinese capital market, the paper analyses the reasons of the problems in Chinese capital market and gives some suggestions to perfect Chinese capital market system to perfect optimization function of capital market to corporate capital structure. The first is to speed up the development of bond market. The second is to establish an efficient stock market. The third is to perfect the constraint mechanism of credit market through further reforming.