An Empirical Research On The Relationship Between The Capital Structure And Value Of Listed Firms

Capital structure is worthy of study for its great theoretical and practical value. It is very necessary to discuss how capital structure influences firm value. Since economic system and perfect degree of capital market is very different in every country, and capital structure and their mechanism is different obviously, it is of practical significance to study the relationship between capital structure and enterprises'value under this peculiar economy environment background of China.Firstly, summarize and analyze the relative theory on capital structure and the value and relative empirical literatures home and abroad. Modern theories of capital structure indicated that the change of capital structure would influence the company's performance in an perfecte stock market. In developed countries, capital structure of listed companies has testified this.and companies of different industry have different capital structure. This paper is designed to find out whether industry impacts capital structure, whether and how capital structure affects their performances. Maybe it can reflect the degree of maturity and efficiency of our security market.This paper chooses companies of automobile, textile listed in Shenzhen and Shanghai stock markets for research. There are 82 companies (35of automobile industry, 47of textile industry) for research. We choose their data from 2003 to 2005. Empirical Analysis include two parts: the first is compare research of impact factors on different industries; the second part is the relationship between capital structure and firm value. Then compare research of impact factors is that: industry has great impact on capital structure, the major impact factors of automobile firms are liquidity of assets and development, while abilities of earning andoperating, and liquidity of assets impact textile firms. Secondly, analyze the relationship between the capital structure and value of automobile and textile firms. This paper uses asset-liability ratio to describe the capital structure of sample companies; Tobin Q is used to describe the value of sample companies. Through the statistical analysis of the above 2 industries. We found the value of automobile companies during 2003 to 2005 has negative relation with its capital structure, while the value of textile companies during 2003 to 2005 has conic relation with its capital structure. At last, combining the analysis result, some advices have given on how to optimize the capital structure and the value of the listed companies in our country from macro and micro angles.