A Study On The Relationship Between Capital Structure And Performance Of The Listed Companies In China

Capital structure of business enterprise is closely interconnected with tax, financial performance and agency cost. It can influence the cost of capital and value of business enterprises, and also affect structure of corporate governance and managers' behavior. Moreover, it will have an effect on economy growth and stability of a nation or region. The listed companies are superior representatives of numerous business enterprises .Optimizing the capital structure of them is closely related to enhancing the quality of listed companies and investment value. And it will strengthen investors' confidence and promote the sound development of capital market effectively.International and domestic scholars have conducted a lot of researches on the relationship between capital structure and operating performance. There were two fundamentally different conclusions of those researches : One is that there was a positive correlation between the capital structure and performance of companies, the higher debt ratios will bring the better results in business performance of those companies and the lower debt rate will bring the worse results. The other is that the capital structure and performance show a negative correlation relationship. The higher debt ratios will bring the worse results in operating performance and the lower debt rate will bring the better results. The disparate and contradictory conclusions bring us some perplexities, so it deserves our continued study.On the basis of previous studies, we conduct a sub-industry empirical research and descriptive analysis of the the relationship between capital structure and operating performance of listed companies in China. The conclusions are: (1) The difference between descriptive analysis and regression analysis brings the inconsistency of conclusions. (2) Linear regression analysis showed that ,in the manufacturing sector, there isn't a significant correlation between capital structure and performance . But the sample group which is higher than the average debt rate shows postive correlation between capital structure and performance , and the correlation is not obvious in the sample group which is lower than the average.(3) The results of empirical data analysis in circulation industry show that capital structure and performance are no significant relevance. But capital structure of the sample enterprises, which are below the average debt rate of the industry, is positively correlate to performance of companies, and there is no obvious correlation between capital structure and operating performance in other sample enterprises.Lastly, we offer some suggestions of perfecting capital structure andimproving performance of Chinese listed companies. And we point out the lack of research correlative problem in this thesis and problems needed more forward discussing in future.