| In their celebrated papers, Modigliani and Miller (1958) argued that the capital structure decision and dividend policy is a matter of irrelevance, affecting neither the value of corporation nor its cost of capital. Their theories are founded on a series of assumptions, such as homogeneous expectation; symmetric information; and perfect market. In a perfect market there is not tax at all, but in the modern society, taxation is inevitability for every individual and firm. Many scholars in foreign countries devoted themselves to the issue on how taxation affects the capital structure decisions. They have conducted a lot of theoretical studies and empirical analyses, and put forward various theories with different ideas. However, little research on this problem has been done in China so far. It is known that there exist many differences in taxation between China and other countries mentioned in the previous study, therefore, my paper try to perform a theoretical in the previous study, therefore, my paper try to perform a theoretical study about the question how taxation in China affects the capital structure policies.The paper introduces the capital structure theory at first and analyses the achievement of the real example of enterprise's financing behavior domestic and internationally,then analyses the influence of the tax revenue and capital structure. Then,carrying on statistical analysis to the financing structure of the listed companies,the paper proves the listed companies of our country really have strong stock financing inclination. Then,referencing the Miller's Model, the paper structures a new theory model,to reason out the listed company's rights financing cost is somewhat low under the current tax system of our country. In this foundation, the paper analyses the influence of tax factor. According to statistics and result that theory analyses,the paper puts forward some optimization of our country listed company's financing policy in terms of tax revenue mainly finally. |
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