Research On The Effect Of Product Market Competition On The Capital Structure Of The Listed Company In China

Financial decision and product market decision are the two most important decisions in firms' developing process and these two decisions have close interactions. However, the strategy of the firm in product market and its firm's financial decision has been studied in two isolated fields for a long time. Until 1980's, this separation in research has caused extensive attention of many economists and they explored the interaction between these two decisions from various viewpoints.Based on the others'research on the theory, this dissertation analyses the relationship between product market competition and capital structure in detail. First of all, the dissertation gives the overall review of the latest literature on the capital structure theory. In order to display the history of the capital structure clearly and systemically, the dissertation classifies it from the following four aspects. They are the research on the capital structure based on agency-cost theory and signal theory, incomplete contract theory, management structure theory and industrial group theory. According to need, the paper specifies the last part in detail. Secondly, the dissertation describes the financial situation of Listed company in China, the reasons that happen and the situation of product market competition in our country as well.And then, we divide the sample into two groups: monopolistic competition sample and perfect competition sample. We obtain the competition invariable we need with the method of Factor Analysis, After gaining the variable, from two different aspects, we test the relationship between product market competition and capital structure with the help of OLS. The first aspect is that the effect of current product market competition on capital structure. The second aspect is that the effect of lagged product market competition on capital structure. Through the above test ,we draw some conclusions: In perfect competition industry,the product market competition has a remarkable positive effect on the capital structure. And has a notable negative effect in monopolistic competition industry. The lagged variable of product market competition doesn't have a significant impact on capital structure.At last, according to the analysis results, this dissertation gives three pieces of advice to Listed Company in China: Improving the management structure and bond market, financial decision being accordance with the situation of product market competition.