A Study On Determinants And Optimization Of Capital Structure Of Listed Company In Western China

As the footstone of modern corporations, capital structure determines the managing structure of corporations and further influences on their characters and value. Rational capital structure is in favor of improving the behavior and value of corporations and it is also the necessary condition for companies to be modernized and become market subjects in market competition. How to optimize capital structure and improve enterprise value is a key issue in corporate theories. This paper analyzes the capital structure of listed companies in Western China, which has positive and profound influence on the quality of listed companies and economic development of Western China.Firstly, this paper introduces the theories about capital structure in western theories, from early capital structure theory to new capital structure and describes and comments on the basic viewpoints, which provide the basis when analyzing capital structure of listed companies in Western China. Then on the basis of large amount of figures, this paper analyzes the current state and characteristics of capital structure of listed companies in Western China.Secondly, the author analysis the key factors which influence on capital structure with the methods of quantitative and qualitative. By used data from 2001 to 2005 of Western listed companies, the normal pool data research shows that the debt leverage is significant negative to profit and non-liability tax, significant positive to corporate size, liquidity of ownership and growth, statistically insignificant to tangibility, and time dummies suggest effects of macro variables had significant effects in 2004 and 2005. The conditional quantile estimates reported show that different effects of the explanatory variables at the different quantiles of the distribution are reflected in the size, sign, and significance of estimated coefficients on the different variables. As we move up the conditional distribution of debt to capital,the coefficient on company size and non debt tax shield increase fist and then decrease, the coefficient on profit increase sharply in magnitude. Liquidity of ownership enters with a significantly positive coefficient at different quantiles except at the 75th and 90th quantile. The coefficient of growth is insignificant at the 10th, 25th and 75th quantiles and coefficient of tangibility is insignificant at all quantiles except the 50th . Lastly, according to the theory and empirical analyses,this paper puts forward the goal and advices for optimizing capital structure of listed companies in Western China.