An Analysis About Governance Structure Of Chinese Listed Companies Affecting Capital Structure Choice

Corporate governance structure and capital structure are the key strategies for an enterprise's survival and development, which has close contact between each other. However, most of the previous study had concerned about governance structure and capital structure separately or just concerned about the choice of corporate governance structure under different capital structure. In the 1980s, when some scholars noted the impact of corporate governance structure on the choice of the Capital Structure, a series of studies are using this perspective. This study based on the previous studies, from the perspective of the impact of corporate governance structure on the choice of enterprise's capital structure and analysis their relationship in detail.The main structure of this paper is as follows: Firstly, this paper reviews the literature of capital structure and corporate governance structure and then analysis the relationship between these two factors. Secondly, the paper demonstrates low proportion of internal and external financing preference equity financing through a series of statistical data on the country's listed companies, as well as corporate governance structure of the status quo. At the same time, this paper had a preliminary analysis on the existing problems and the causes of problems. On this basis, the paper selected assets and liabilities as an index of capital structure and selected measurement indicators for all aspects of corporate governance as explanatory variable. We try to achieve dimension reduction and choice the main factors by using factor analysis. Then we use the factors which are selected to do regression analysis. Finally, this study provides recommendations on how to optimize the financing choice of listed companies in China according to the previous theoretical analysis and empirical research findings.This paper is divided into six parts.Chapter 1 is Introduction. This part seeks to clarify the problem, background, purpose of the study, main contents structure , ideas, the theoretical foundation as well as research methods of this paper.Chapter 2 is the theory analysis of corporate governance structure and capital structure. This part reviews the literature of capital structure and corporate governance structure and then analysis the relationship between these two factors. This study reveals that the capital structure should reflect the rights and obligations of interest groups, which would determine the governance structure. However, different financing choice would determine the mode of distribution to different stakeholders, and different stakeholders will use their power to influence the financing choice of the company in order to determine different capital structure.Chapter 3 is the status quo of governance structure and capital structure of china's listed companies. This section detail on the status quo of capital structure and corporate governance structure and give preliminary analysis about the existing problems and the causes of problems.Chapter 4 is the design assumptions and empirical studies. Based on the analysis of the literature review, this paper selects 30 variables to describe corporate governance structure and analysis the relation between corporate governance structure and capital structure.Chapter 5 is the empirical analysis about corporate governance structure and capital structure choice. The article selected assets and liabilities as measurable indicators of capital structure choice, using various factors of governance structure as the explanatory variable and the listed company's 2003-2006 related data as a research object. This study uses factor analysis to achieve Dimension Reduction to eliminate the impact of variables correlation to regression analysis, and identifies the key factors of the capital structure of listed companies, which can be used as independent factors to regression analysis. In order to avoid the impact of inconsistencies of different indicators measuring unit to the result, this study uses non-dimensional data method before multiple regression analysis.After test, this study gets conclusions as follows: equity concentration negatively related to capital structure; Minority Union positively related to the ratio of total debt to total asset; regulatory commission structure positively related to the ratio of total debt to total asset but their relationship is insignificant; company legal environment positively related to the ratio of total debt to total asset; Board size and the proportion of independent directors negatively related to the ratio of total debt to total asset; Board activities positively related to the ratio of total debt to total asset, but their relationship is insignificant; Change of controlling power positively related to the ratio of total debt to total asset, but their relationship is insignificant; unpaid staff negatively related to the ratio of total debt to total asset; Management structure positively related to the ratio of total debt to total asset..Chapter 6 is the main conclusions and policy recommendations. This part concludes that there are close relationship between the corporate governance structure and the capital structure. However, the failure of the internal and external governance mechanisms makes a special capital structure which showed that a high financing rate and low rate of assets and liabilities. In this regard, this paper provides the following policy recommendations, constructs a mechanisms of coordinated development and achieve the purposes of optimizing its capital structure to keep ideal level for the mechanism of governance structures:(1) Optimizing Ownership Structure; (2) strengthen the corporate governance mechanism; (3) Strengthening the management of information disclosure; (4) constructing the capital market gradually and develop a bond market; (5) constructing a market of the managers, and strengthening the relevant legal system in order to control the enterprise management from outside of listed companies.