The Research On The Determinants Of Capital Structure About Chinese Listed Company

The capital structure is a key problem in financial theory. Since thenaissance of MM theory, many scholars commenced on the study. Foreignscholars has spent a lot of time to study the determinate factors of capitalstructure and got useful result. However, foreign scholars study foreigncompanies and little has been done to study companies in China, a newdevelopingmarket.ThisarticlehassummarizedtheKeytheoryofcapitalstructureinwesterncountriesaftertheM-Mtheorem(Modigliani,Miller(19581963).Then,showsthe development of Chinese companies'financial environment, and find outthe change of their c capital structure. Next, the capital structure of ListedCompanyisthemostimportantparttoresearch.Itpointsoutthattherearetwocharacteristicsofthecapitalstructureforlistedcompanies:Firstly,thepeckingorder of the listed companies gives preference of external equity financing,retained earning-refinancing next and liability financing lastly. Listedcompaniesinourcountryhavestrongpreferencetoequityfinancing.Secondly,in the capital structure of Listed Companies, the structure of liabilities is notrational, the level of long-term debt ratio is low, and current liability is a bithigher. Compared with the developed countries, we noted that leverage ratiosof listed companies in China are far below that of listed companies in developedcountries.This article mainly studies determinate factors of capital structure forChinese listed companies. We do have research on this topic but it is notenough. The existing theories of capital structure have explored the perplexedproblems from different angles such as taxations, agent costs, unbalancedinformation, control interest of company, etc. All these theories indicate thatthere are lots of potential determinants to capital structure. However, we donot haveanintargetedframeworkthat cansynthesizeall thesetheories uptillnow. We select manyindex variables that mayaffect on the capitals structure.Then controlling trade factor, we make an examination by regression on eachindustry of Chinese listed companies. During the research on the factors, wefound factors are in accordant with other countries in the fields of theoryforecastofcapitalstructureinwesternenterprises. Butweareexperiencingthetransition from plan-system to market-oriented economy and state-ownedsharesarestillinthecontrollingposition,thatisthemajordifferencebetweenourcompanyandthewestern's.We think it will be the most fundamental reform of our China's capitalmarket to re-orient the function of our capital market. Stock market should betransformed from acting as the financing tool of some targeted enterprises tobe a social scheme for optimizing financial resources. On the other hand, dueto that China's bond market is still in the early development stage, it willcontribute a lot to China's enterprises and capital market to expedite thedevelopmentofbondmarket.