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Positive Research On Correlation Between Debt Ratio And EPS Of The Listed Companies Of Our Country

Posted on:2007-10-08Degree:MasterType:Thesis
Country:ChinaCandidate:G F WangFull Text:PDF
GTID:2179360182961085Subject:Accounting
Abstract/Summary:PDF Full Text Request
Liability operation is a common phenomenon in the modern economic society. As one of financing methods of listed companies, liability has exerted an extensive influence on enterprise's value for a long time, which has been paid close attention. The discussion about capital structure and the correlation between capital structure and profit ability and enterprise's value has never stopped at home and abroad, but these conclusions drawn have obvious uncertainty, and even some classical theories still deviates from each other.The purpose that the listed companies choose to operate in liability is to realize the expansion function on the earning per share (EPS) through the financial lever effect of debt capital so as to realize the enterprise's value maximization. So, in theory, the enterprise's value and EPS should grow with the increasing of the asset-liability ratio, namely the asset-liability ratio and EPS present the positive correlation relation. However, because the full play of the financial leverage should be limited by a great deal of environmental conditions, so the conclusion drawn from the empirical study has often deviated from the theory. Studying the impacts on EPS of different asset-liability ratio will bring realistic directive significance in financing behavior of listed companies.The paper uses EPS as the index to measure the enterprise value, studies how the EPS changes with the degrees of liability, i.e. the correlation of the asset-liability ratio and EPS. The paper combines the theory analysis with empirical study, and has fully considered the impact of the trade factor, regard this as the basis of dividing into groups, divide the sample into such five samples as manufacturing industry, real estate industry, information technology industry, traffic transport and storage industry, authorizing for dispatch and retail business, etc.; In choosing of model of analyzing, this paper introduced Pearson correlation coefficient, Kendall τ correlation coefficient, and Spearman order correlation coefficient at the same time to measure the correlation between the variables from different angles, and use t examine and p- examine in Linear return analysis. Then it chooses the financial data of the listed companies both in Shanghai and Shenzhen Security Exchange Market from 2002 to 2004 as the sample, and research and analyzes the trend of impact on earning per share (EPS) of theasset-liability ratio of listed company through empirical study.The following conclusions can be drawn from the empirical study:I. The earning per share (EPS) of the listed company of our country generally demonstrate the conic relevant relations with the debt ratio, and each coefficient is less than 0, namely has proved the existence of the best capital structure ;II. By synthesizing the result of linear return analysis and conic return analysis , we can know that things are different from trade to trade-. Analyse on the trade average, debt ratio of listed company in manufacturing industry overall is exceed the debt ratio of the best capital structure order, which leads the negative relationship between the debt ratio and earning per share (EPS); debt ratio of listed company in real estate and retail business overall do not reach the debt ratio of the best capital structure order, which leads the positive relationship between the debt ratio and earning per share (EPS); the debt ratio levels of information technology industry and traffic transport and storage industry listed company stand around the best capital structure level basically?...
Keywords/Search Tags:debt ratio, capital structure, earning per share (EPS), financial lever effect, correlation
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