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Study On Corporate Capital Structure Of China

Posted on:2005-03-04Degree:MasterType:Thesis
Country:ChinaCandidate:L T LiuFull Text:PDF
GTID:2156360125956579Subject:Finance
Abstract/Summary:PDF Full Text Request
Capital structure is very important to improve corporate value and perfect corporate governance. So research on this is meaningful on the days that shareholder' s profit is more and more regarded.Earlier theories go to two extremities. One theory thinks capital structure is positively correlative to corporate value while the other deems that both have not any correlativity. This status doesn' t last until MM capital structure appeared. This theory proves that capital structure have no correlative to corporate value under some hypothesis. When economists abolish these hypothesis, they prove that properly increasing liability ratio is favorable for improving corporate value. But when the increasing of liability ratio reach some extent, this will improve financial venture and bankruptcy cost, hence reduce corporate value. Contract economics that develops quickly from the end of last century analyses liability is necessary for corporate value and corporate governance and contributes to the development of capital structure theory from agent cost, information asymmetry and corporate control.On account that public company that is controlled by state-owned enterprise has all the finance tools, research on capital structure of public company can veritably reflect realistic problems. Different with state-owned enterprises which hold high liability, public companies possess very low asset-liability ratio and have strong tendency of issuing stock. This tendency is relevant to unmaturity of Chinese stock market, state-owned corporate governance and undevelopment of financial market. Some non-institutional factors include lack of liquidity of corporation share dealing market and absence of bankruptcy mechanism.Finally, the thesis brings forward some assumption on how to optimize corporate capital structure. In fact, undevelopment of corporate bond market is one institutional fact that leads to our current capital structure. This paper analyses the status of corporate bond market and put forward some policy suggestion.
Keywords/Search Tags:capital structure, corporate bond, corporate governance
PDF Full Text Request
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