Empirical Research On Optimum Capital Structure Of Company Under The Angle Of Agency Cost

Modigliani and Miller initially went on initiative research on the theory of financing structure. MM theorem and revision theorem, which they put forward in 1958, have established the foundation of the modern capital structural theory, subsequently going through the Tradeoff Theory, the Agency Cost Theory, the Asymmetric Information Theory, the Incentive Theory and the Corporate Control Theory, forming the capital structural theories of modern enterprises progressively. These theories and hypotheses explaining the enterprise's financing decision behavior and capital structure are different. Some conclusions differ from one another, some are even contradictory each other. Therefore, that enterprises improving their market values through what kind of financing way and how to confirm the optimum capital structure is becoming the warmest important problem discussed in the realm of modern finance. The Chinese capital market is a new developing market under the transition economy condition, coroprate government mechanisms are imperfect and incomplete. The listed companies government exist a great number of problems unavoidably. The phenomenon that the financing way and the financing structure of the listed companies are single is ubiquitous. The listed companies have a partiality for equity financing, and the problem that the financing was disposed inefficiently is more outstanding. In addition, the modern joint-stock companies give birth to the separation of the ownership and the operation right,leading to the inconsistent interests between the ownes and the operator, the asymmetry information and the incomplete agreement, the Moral Hazard and the Adverse Selection, bringing ageny cost. The existence of ageny cost causes the waste of company resources, and damages the interests of the shareholder and the creditor, and then causes enormous danger to the distribution of social resources. So, how to reduce ageny cost, solve the problem of agency, and optimize the capital structure of the Chinese listed company becomes one of the fundamental problems in the system reform of modern Chinese enterprise. It Concerns the vital interests of the enterprise contributor (shareholder) including country, concerns the efficiency of the whole enterprises' system, and also concerns whether the enterprises of our country could succeed in the face of the competitions of international enterprises or not.This thesis has studied the relationship between agency cost and the company's financing structure, carrying on the theory and empirical analysis to the optimum capital structure of the listed company of our country in terms of agency cost. First, it carrys on the summary to the relevant theories of agency cost and capital structure, then analyzes the relation of agency cost and capital structure theoretically, and elicits that the capital structure of enterprises is optimal when the marginal agency cost of the stock right equal the marginal agentcy cost of the creditor's right. Then, this thesis regards the listed companies of Shanghai and Shenzhen bourse in 2005 as the sample (the total amount of the sample is 1213), uses SPSS to carry on the empirical analysis to agency cost and optimum capital structure of the listed companies of our country. Results indicate that the capital structure of the listed companies of our country maintains prominent nonlinear square connections with agency cost. When separately regarding the administering expense rate, the operating expense ratio and the asset utilization ratio as the measure index of agency cost, its optimum capital structure is 28.31%, 40.85%, 72.37% respectively. Meanwhile, this thesis also carrys on the empirical analysis to the optimum capital structure of the listed companies of different industry. Results show that industry prominently influences the optimum capital structure, and the capital structure of most industries in study period is less than he optimum capital structure. Finally, this thesis carrys on the reason analysis to empirial result, and proposes countermeasures and suggestions that optimize the structure of capital of listed companies of our country and reduce agency cost of listed companies of our country.