An Empirical Research Of The Relationship Between Capital Structure And Performance Of Private Enterprises In China

Capital structure has been being a great research topic with great theoretical value and practical significance.While against the backdrop of Chinese special system,there may be significant differences between state-controlled companies and private companies in financing environment,corporate governance.At present,the research of the relationship between capital structure and corporate performance mainly focused on all listed companies of the A share market.Although some researches have been conducted and studied on listed private enterprise companies by some scholars,they did not have a comprehensive measurement of private enterprises' operating performance and they focused on the use of many profitability indicators of private enterprises to explore their relationship between capital structure and corporate performance,while ignoring the comprehensive reflection of the performance of the private enterprises,such as,solvency of the debt,operating capacity,cash flow and growth indicators.Based on this consideration and considering the above-mentioned indicators,this paper adopts the same way of the research methodology as Genfu Feng et al(2000) in the selection of indicators and performance evaluation,which first selects 25 indicators to reflect the five dimensions mentoned above,then we select 10 indicators after correlation analysis to make principal component analysis and finally we get the general performance indicators Y to fulfill multiple regression analysis.This article is divided into five parts:the first chapter explains the research background,objectives and significance,defines the scope of the study and clarifies the research ideas in this paper.Chapter 2 briefly reviews the theories about relationship between capital structure and corporate performance,introduces and makes comments on important domestic and foreign relevant empirical literature. Chapter 3 is the research design,including data sources,variables' selection,the building of econometric models and research hypothesis.Chapter 4 analyses the empirical findings for the study.The final chapter gives the conclusions of this paper, and brings forward to the shortcomings and future research directions.Through the empirical research,we come to the following conclusions:there is significantly negative correlation between asset-liability ratio and corporate performance,but it does not have a reasonable scope of liabilities.There is positive correlation between current liabilities and corporate performance,while the negative correlation has been found between long-term liabilities and corporate performance. There is also negative correlation between liabilities with interest and corporate performance.Secondly,we have the same conclusions as overall samples in the study of manufacturing and wholesale and retail industry.There is a negative correlation between current liabilities and corporate performance in electronic information industry.Current liabilities and corporate performance is negatively correlated,whereas long-term liabilities are positively related to corporate performance and interest-bearing liabilities have a positive correlation with corporate performance for the real estate industry.Grouped by size,the larger the scale is,the more significantly negative the correlation between long-term debt rate and performance for private enterprises is.The conclusion that the capital structure has a negative correlation with the performance for Chinese private enterprises is consistent with the current domestic researches,but contrary to the contemporary theories of capital structure,which is correlated with a lot of factors,such as,stage of development,profitability,lack of bond financing,and so on.In addition,current liabilities and long-term debt show different correlation with corporate performance because of sectors,which show them the ways how to use debt maturity structure to improve the performance of private enterprise in China.Interest-bearing liabilities is negatively correlated with performance for private enterprises,which tells the company to pay attention to corporate image and credit enhancement and make use of increasing commercial credit liabilities.