Empirical Research On Determinants Of Capital Structure Of Chinese Listed Companies

Capital structure theory has been comprehensively discussed and studied once it is raised by Modigliani and Miller in 1958. The MM Theory supposes that a firm' s capital structure is not correlated with its market value with the conditions that there are no trade cost, tax and information asymmetry. The MM Theory just describes the ideal status. From then on, many scholars release some theoretical hypothesis of MM Theory to meet the realities of business. And they find that there is nearly relationship between the capital structure and firm' s market value. Empirical analyses of the determinants of firms' capital structure are also conducted, thus expanded MM Theory theoretically.Firstly, this paper goes through literature review, reviewing the results of empirical research at home and abroad, carding a capital structure theory of evolution: from the traditional capital structure theory to recent the market timing hypothesis. Secondly, in light of the characteristics of Chinese listed companies' financing behavior and the existing problems of capital structure, the paper analyzes the positive impact of the reformation of the dispersion between share and rights on financing structure and the immediate impact on capital structure from the aspects of equity financing, and debt financing. Then, by using capital structure data of Chinese listed companies in 2006 and going through single-factor analysis of variance and the corresponding LSD tests, the paper does research on the differences among trades of the capital structure of Chinese listed companies. The results show that trade factors have got a significant impact on the capital structure of listed companies, and the obvious difference of capital structures between trades are not caused by the abnormal value of individual trade, but widely exists among the trades. Next, based on the real estate listed companies and IT listed companies which have got obvious difference among capital structures, the paper does research on the impact of company factors towards capital structure by using financial data of these listed companies in 2006 and combining factor analysis and multiple linear regression analysis. The results show that the capital structure of real estate listed companies and IT listed have a positive correlation with growth of the companies, the value of the secured assets, and uniqueness of the products. They also have a negative correlation with the liquidity of assets. The capital structure of real estate listed companies is not significantly correlated with profitability and scale of enterprise. The capital structure of IT listed companies is negatively correlated with profitability but positively correlated with scale of enterprise. There is a difference among determinants of capital structure of listed companies in different trades. The impacts of company factors towards the listed companies in different trades are not totally the same. Finally, this paper made some suggestions of how to optimize capital structure of listed companies according to the company itself and the National policy.