A Positive Study About The Effect Of Growth On Financial Structure Based On Chinese A-stock Market Companies

The growth enterprise is extremely significant both to the capital market healthy development and the macroscopic economic growth. In the view of the capital market , essentially, a capital market be developed, perfect, standard, health or not is decided whether it will be able to mobilize and assign the deposit effectively to the most growth potential and the most profitable investment trends. On the other hand, in the view of the enterprise, if the enterprise which is in high speed growth stage does not take its financing structure to optimization, and disregards own fund and the managed capacity expands blindly and only asks the scale not to speak the profit, the result is unavoidably defeated. So, how the enterprise which is at the high speed growth stage uses the limited capital resources to optimize its financing structure and ensure the enterprise stable growth t is important.The theoretical and empirical studies in western countries suggested that growth is an important factor that influences a company's capital structure. But the empirical studies in the same area of our country got conflicting conclusions. Furthermore, compared with foreign studies, there are some shortages in the selection of variables, scope of sample and study methods in our country's studies. Consequently, based on the previous studies, this paper makes some improvements in these aspects and does some groping studies.This paper, using pooled cross-sectional observations of companies listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange from 2002 to 2004, examines the relationship between growth opportunities and capital structure. Results show that growth have significant influences on capital structure after controlling for firm size, profitability, industry, collateral value of assets, non-debt tax shields and refunding ability. The higher growth a corporate has, the lower debt level it will hold, the higher the proportion of long-term debt to total debt will be, and the lower the proportion of bank loan to total debt will take. The findings have confirmed the proxy cost theory and the strategy corporate finance viewpoint.