The Character And Determinants Study On Capital Structure Of Small And Medium-Sized Enterprises In Sheyang County, Jiangsu Province

Small and medium-sized enterprises (SMSE) have got much development since the reform and opening up in China. SMSE, as the core of the private economy, have been the most dynamic growth of China's national economy. SMSE play an irreplaceable role in alleviating the employment pressure, maintaining socio-economic stability, particularly in technological progress and mechanism innovation, whose contribution rate of economic growth now stands at 50% above. But the financing problem of SMSE does actually exist.So far, although the government has made great efforts, and the financing problem in the larger size enterprises has also been eased, the most SMSE still face the financing problem, especially the SMSE in the area of county. Regardless of which causes difficulties in financing, the ultimate financing channels and capital structure can be reflected. This paper studies the character and the determinants on capital structure of the SMSE.This paper uses a sample of 53 SMSEs in Sheyang County, Jiangsu Province, with 3 years(2004-2006) data on the financial statements, supplemented by surveying sample enterprises, in order to acquiring the basic information of the enterprises and the legal representatives. Both qualitative analysis and quantitative analysis methods are used in this paper. Qualitative method analyzes the possible determinants and forecasts the direction of impact. Quantitative method contains the single factor analysis and the multivariate analysis, there into, the single factor analyzes the character and the single factor impact on capital structure, further, we use Multiple Linear Regressions (Panel Date) to analyze each factor how to impact the whole capital structureThrough descriptive analysis and empirical analysis, the paper comes to the following conclusions: fund gap exists in SMSE, who has a strong financing will; the amount of long-term debt in SMSE is very small; there are many blocks on commercial credit financing channel for SMSE; size, asset security value, enterprise legal representative working years, profitability, non-debt tax shield, and growth of the industry are determinants impacting the SMSE capital structure. Therefore, in order to solve the SMSE financing problem, we make the following suggestion: meeting the different financing needs; building various financing channels; establishing the new security regulations which adapt to the actual situation and improving the credit guarantee system; improving financial and distribution system, and creating a business-friendly environment for SMSE.