The Effect Of Ownership Structure And Capital Structure Of Listed Companies In China

The late 1990s saw the innovation of financial reform within the enterprises in China. The enterprises'right to make decisions on finance has changed qualitatively; the development of capital market provides listed companies multiple choices of financing approaches; The size of capital market and the qualities of the listed companies are more larger during about ten years, but the standard of test whether the reform is successful is not the size and the qualities of the listed companies .That is the behavior of the companies is confirm with the quest of the Modern Enterprise System. Separately, the financing behavior of the corporate is very important. However, the market-oriented reform takes place in China who has special political economy, does the financing right of companies is rational and actively?That to say whether the companies are choice their capital structure in the state of market. As the objective of financial reform, how about selection of capital structure in listed companies? Separately, what role the government which the controller of the state-owned corporate is taken play? That remains an unresolved issue and deserves in-depth thought and research.As for the research route of this paper, we start with the current status of capital structure and ownership structure in Chinese listed companies, and research the relation between the ownership structure and capital structure in Chinese list companies combining with standard analysis and empirical analysis. At abroad, the research results about ownership structure and capital structure theories are abundant, but analysis about the relation of them in list companies is not enough. Otherwise, because of the special of ownership structure, the present ownership partition method is inadequate to track down the ultimate controlling shareholders. Therefore, using ultimate controlling right theory framework, we attempt to analysis the link between ownership structure and capital structure adopting empirical method in the special state of our country.As for the content of this paper, firstly we conclude the theories about ownership structure and capital structure. Secondly, we adopt ultimate controlling right theory to classify ultimate controlling shareholders of listed companies. We classify two parties of listed companies of our country: state-owned company and non-state-owned company. We make the theory analysis and the positive test about the effects of ownership structure on capital structure choice using the observations on Shanghai and Shenzhen Stock Exchange Market. The results show that the companies that ultimately controlled by state have markedly low leverage than other companies of ultimately controlled by non-state. It finds that the proportion of state-owned firms is marked negatively related to debt ratio; the proportion of stock-holding of state-owned is marked negatively related to debt ratio; the proportion of stock-holding of executives is negatively related to debt ratio but the result is not marked; the first largest shareholder shares is positively related to debt ratio but the preceding ten larger shareholders share is marked negatively related to debt ratio. Finally, policy recommendations are put forward to promote listed companies to make the correct choice of ownership structure and capital structure in China. The main innovation of this paper is we think about the ultimate controlling character of the first largest shareholder and the recalculated proportion of stock-holding of state-owned in discuss the relationship between ownership structure and capital structure.