Capital Structure And Corporate Performance

Since The MM Theory was proposed in the 1950's, western scholars have been gradually raising interests on the issue of capital structure research, which became a hot point of corporation research. Scholars had done many researches comprehensively and deeply on the relationship between the capital structure of listed companies and corporate performance, however, because of the variation of their sample selection and research methods, ultimately they obtained many different research results, and so far, there is no a unified point of view. Related researches indicate that the influences of capital structure on firm performance will vary due to the differences of industries, so, it is necessary to choose a more typical and mature industry to further study the relationship between the two. With the development of science and technology, the electronics industry has become a industry which has been applied in extremely broad and far-reaching area, and even penetrated into our daily lives in every corner, and once again china has planed to develop the electronic information industry as a strategic industry, which shows that listed companies in China's electronic manufacturing industry will attach importance on the development of the country's economy in the future. The own characteristics of the Electronics manufacturing enterprises have determined that the structure of listed companies on the finance and governance and other aspects have its own special nature of the industry.This paper selected 24 Listed Companies in the electronics manufacturing industry as the sample, and considering the impact of split share structure reform, set the study time period from 2005 to 2009. on choosing the indicators of corporate performance, the majority of scholars use ROE or Tobin's Q to measure values, we consider multi-indicators which could reflect corporate profitability, solvency and growth abilities of the listed company for a more comprehensive measure of corporate performance, and then use factor analysis to get a single, comprehensive performance indicators, finally, use panel data model to do an empirical research of the mutual impact between capital structure of listed companies and corporate performance.The research suggest that debt ratio of China A-share listed companies on electronic manufacturing industry was significantly negatively related to company performance, namely the debt level increases, and corporate performance will decreases. While, in turn, corporate performance has a significant negative influence on the asset-liability ratio, which shows that the company with a better performance has a lower debt levels, and this is in accordance with the new priority pecking order theory. Both of the proportions of top ten shareholders and the company growth have a significant positive effect on corporate performance.