Corporate Growth Opportunity And Policy Choices

The difference of capital structure will lead to the collision of corporation benefit, capital cost and the different of financial risk. Sequentially, it will have impact on the whole market value of corporation. The abroad theoretical and empirical studies indicate that growth opportunity plays an important role in capital structure. Nevertheless, the domestic scholars draw a different conclusion in this field by empirical studies. Simultaneously, comparing with abroad research, to a certain extent, the domestic scholars have insufficiency on research methods and selecting variables. On the basis of prevenient research, the author has improved from two aspects, including variable selections and research methods.The dissertation adopts statistical analysis and takes 191 listed companies as research sample. These companies are from the sample stocks of Shengzhen-Shanghai 300 consolidated index from 2004 Shengzhen-Shanghai stock market as research sample. It applies multiple regressions to analyze some statistical indexes that can influences capital structure by SPAA and EVIEWS, including proportion of state stock ownership, growth opportunity, corporation size and ability of profit. Moreover, it examines the relative significance. The three quoted indexes are widely used by many literatures to measure the growth opportunity. They are including: 1. The proportion between market value of corporation assets and book value of assets (mbva). 2. The proportion between market value of net assets and book value of net assets. (mbve) 3. The proportion between book value of tangible assets and market value of corporation assets (ppemva).Our empirical studies have indicated that the corporations that have more increasing opportunities much less chooses debt financing and pays dividend. It provides more foundation for contracting costs arguments. Namely, the corporations that have many increasing opportunities much less make use of debt financing to heighten their whole market value.Synchronously, the corporations that have plenty of growth opportunity are easier to suffer underinvestment and assets substitute, which can greatly influence the capital structure . Therefore, on the foundation of previous literature, the author has analyzed and summarized that the corporations that have more growth opportunities should keep their debt financing structure few quantity, short term, redemptive and transformable.