The Two-Way Empirical Study On Capital Structure And Firm Performance Of The Listed Companies In China

The capital structure of listed company is not only correlated to the capital cost, taxation costs, agency costs, and governance structure (i. e. the relevant interests of the company's stakeholders), but also correlated to the company's performance and the company's growth capability in the future. There exists an interactive relationship between the capital structure and the performance of the listed company, that is, the capital structure of the listed company influences its performance; and vise versa.Scholars at home and abroad have carried out a large amount of research on the correlations between the capital structures and the performances of the listed companies. Their findings show two definitely opposite conclusions: one is that the correlation between the capital structures (debt-asset ratio) and the performances of listed companies are always positive, in other words, the higher the debt-asset ratio, the better the company's performance, while the lower the debt-asset ratio, the worse the company's performance. The opposite conclusion is that the correlation between the capital structures (debt-asset ratio) and the performances of the listed companies are always negative, in other words, the higher the debt-asset ratio, the worse the company's performance; while the lower the debt-asset ratio, the better the company's performance. These two opposite conclusions seem to cause confusions.Based on the above findings, this thesis analyzes the current situation of the capital structure of listed companies of our country, and by using the two-way method, simultaneously studies a number of variables between the capital structures and the performances of companies listed in Shenzhen and Shanghai from 2002 to 2004. Our findings show that "the two-way correlations between the capital structures and the performances are always negative". This thesis also analyzes the reasons for this phenomenon and gives some suggestions on how to optimizing the capital structures and improves the performances of listed companies in our country.