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The Research Of Capital Structure And Firm Value Created Of Listed Companies In China

Posted on:2005-04-25Degree:MasterType:Thesis
Country:ChinaCandidate:S XiaoFull Text:PDF
GTID:2156360152970760Subject:Business Administration
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With developing of world economy and Chinese economic system reform, our domestic companies are facing severely competitive market. The company must enhance value in operation and obtain adequate funds through rationally financial method to survive and develop under the complicated circumstance. In the advancement of modern enterprise institution, there is phenomenon of "cheapest manager and the most expensive company system" which cause to aggrieve the benefit of investor, because the real scientific enterprise institution has not been constructed. Especially for listed companies, there are "financial preference" , "toll-free equity capital" , gradual descending of performance, unreasonable capital structure and severe wasting of resource, which destroy the optimizing resources allocation and financing function of stock market. EVA, Economic Value Added, is created to evaluate the actual value of company by Stern Stewart company early in 1980' s, which means the amount of the adjusted after-tax operating profit earned by a company minus the cost of the total capital employed by it. The EVA can excite manager to act and think like a stockholder, also avoid manager' s preference for control right and reduce the cost of capital by taking into account cost of equity capital. In the world, EVA has been adopted in more than 300 corporations whose operating efficiency and growth rate have been increased. The application of foreign corporations can be used for Chinese companies' reference. In order to grope for effective of EVA managing system in optimizing structure of capital and avoiding financial preference, author tries to study the relationavoiding financial preference, author tries to study the relation between EVA and structure of capital of Chinese listed companies.After commenting on basic theory, accounting method of EVA and theories about capital structure, author use listed companies in Shanghai stock market as example to carry out empirical analysis on relation between capital structure and EVA, which point out there is critical value of capital structure and negative relation between capital structure and EVA. So financial preference is helpful to increasing the value of the firms when EVA is adopted to evaluate Chinese listed companies value. Finally, some measures are recommended to optimize the capital structure.
Keywords/Search Tags:Economic value added, Capital structure, Equity capital, Cost of capital, Empirical study, Firm value
PDF Full Text Request
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