On The Related Empirical Research Of Capital Structure And The Performance Of Listed Companies In China

Modern theories of capital structure indicated that the change of capital structure will influence the company's performance in an effective stock market. Companies can benefit more from liabilities financing than from equity financing. When company's assets earning ratio is higher than the debt capital cost proper to increase in debt to raise its business performance;When company's assets earning ratio is lower than the debt capital cost proper to decrease in debt to reduce losses. So if company conscious to debt managing, debt rate and business performance should present the positive correlation. Capital structure of listed companies has testified this.This paper is designed to find out whether the capital structure of sample companies affects their performances. We also want to check the view that capital structure and firm performance are positively related in a definitely range. Maybe it can reflect the efficiency of our stock market.The study on listed companies is much more important than that on non-listed companies since the operation and management of listed companies are more standardized according to theory of capital structure and capital of them comes from the capital market. This paper choose three listed companies in Shenzhen stock market for research to eliminate the influence from industry classification and make performance of variable companies more comparable.This paper uses liability-asset ratio and long-term debt ratio to describe the capital structure of sample companies;ROE and ROS percent asset are used to describe the performance of sample companies.Through the statistical analysis of the above 3 industries we found that performance of sample companies from 2003 to 2004 has no relation with its capital structure.