Empirical Study On The Relationship Between Capital Structure And Corporation Performance Of The Listed Companies In Hubei Province

Market economy is based on micro-enterprises, and a good corporate management and sustainable development, it can not be separated from investment financing activities, the corresponding variety of financing, funding types and combinations of capital changes in the company's capital structure, and then raise or lower business performance and business quality. Capital structure, performance and their mutual influence of listed companies are more concerned. Capital structure is the fundamental of the corporate governance, and the corporate governance dependent on the capital structure. Creditors, shareholders and managers are the main part of equity financing and debt financing in the capital structure. They dynamically depends each other in corporate governance, and play a major role in company performance. Reasonable capital structure has important practical significance for strengthening internal management, standardizing business operations, optimizing the allocation of resources and enhancing corporate value.Domestic and foreign scholars have done a lot of theoretical and empirical research on the correlation between capital structure and corporate performance, and obtained two contrary views. One view considers that the correlation is positive and the other considers it is negative. Therefore, it is worth studying the correlation in different countries and regions.In China, the correlation has been the hot issues discussed in industry and academic in recent years. Performance of listed companies and market performance of shares play a role as the economic barometer to some extent. In this paper, it selected 53 companies in Hubei Province as the research object, which are listed in stock market of Shanghai and Shenzhen. It researched the correlation between corporate performance and capital structure of them, and built a multiple linear regression model for the measurement and analysis via the 2007-2009 financial data. The result showed that the correlation is positive, which means the improvement of debt ratio in the capital structure can optimize the performance of joint-stock companies.This paper aims to identify defect in capital structure optimization of listed companies in Hubei Province via the research on their capital structure and comparison with listed companies in centre, east and west China. Moreover, it proposed the strategies and recommendations, including two aspect company itself and external environment, for optimization of capital structure. On the one hand, starting from the listed company itself, provide a reasonable dividend distribution by dividend policy, capital structure of listed companies to maintain flexibility and establish a perfect internal governance structure; on the other hand, starting from the company's external environment, to promote the development of bond markets, improve the information disclosure system and improve the legal and regulatory regime. It is possible to provide reference for decision-making and recommendations for the development of listed companies in Hubei Province and the local economy.