A Study On China's Pharmaceutical Corporate Capital Structure And Its Dynamic Optimizing

Since the MM theory is raised, study on capital structure theory has made gratifying progress, and has formed a complete theoretical system, including Early-stage capital structure theory, the classical capital structure theory, balance theory, agency theory, the theory of signal transduction, pecking order theory. Meanwhile, empirical research of Capital Structure has been extending and its conclusions are closer to the actual. Relative to the United States and other more matural western market economy environment, China's capital market relatively lag back. However, as China's market economic system continuously improved, development of the capital market is accelerating, capital structure become increasingly important.Pharmaceutical manufacturing industry is one of the rapid developing industry, which is closely related to the improvement of people's living standards. Medicine manufacturing, characterized by significant economy of scale, is a typical high input, high risks and highly concentrated industry. Characteristics of Medicine manufacturing, trends of global pharmaceutical industry development, together with the status where Chinese medicine manufacturers stand, and the problems they are confronted with require our pharmaceutical companies to quickly optimize their capital structure, and improving the efficiency, innovation capability. This article makes static and dynamic research on capital structure of China's pharmaceutical corporate with samples of 34 pharmaceutical manufactures circulating in Shanghai and Shenzhen A-share markets from 1996 to 2005.The static models show that inflation rates, operational efficiency, the actual income tax rates, liquidity and profitability affects the level of long-term liabilities; while liquidity, size, profitability, the ratio of intangible assets, non-debt tax shield, growth, operational efficiency, the rate of inflation influence the level of total liabilities.Dynamic model studies show China's pharmaceutical manufacturing company's capital restructuring did not display much individual characteristics. Dynamic adjustment speed of the long-term liabilities/total assets is 0.263, while the speed of total liabilities/total assets is 0.339, faster than the average speed of Manufacturing industry, but a little slower than information technology, real estate's adjustment speed.On one hand, our pharmaceutical industry of China is facing severe challenges, coming with the health care reform, industry consolidation. On the other hand, impeded financing channel seriously hampering their long-term developmentThe pharmaceutical companies should fully consider their own strategies, financial situation, and take the initiative to expanding financing channels by introducing venture capital, strategic investors.