The Empirical Study On Determinants Of Capital Structure Of Chinese Listed Company

Capital structure theory had attracted much attention from the field of economics since the MM theory was raised. Many foreign and domestic researchers have done a great number of both theoretical and empirical studies on the determinants of capital structure, gaining many achievements. However, due to the economic complexity and peculiarity in various countries, differences on methods and emphases of study, the results of empirical studies are not completely consistent with related theories, even violate them. The capital markets and corporate governance structure in china are different from that in developed countries. In the Chinese context, researching on determinants that influence the capital structure choice for Chinese companies will be extremely meaningful for the standardization of financing activities and the optimization of capital structure.The article begins with reviewing main western capital structure theories raised after MM theory, and introduces the concept of Investment Opportunity Set and its measures, preparing for using it as the measurement of corporate growth. Then it emphasizes on investigating characters of capital structure and financing activities for Chinese manufacturing listed companies, indicting that their debt level is lower than that of domestic industry enterprises and two characters of capital structure Chinese manufacturing listed companies possess: Firstly, the proportion of external financing is relatively high, and Chinese manufacturing listed companies show intensive equity financing preference. Secondly, the debt structure of Chinese manufacturing listed companies is irrational because of high level of current liability.Based on analyses above, we select eight factors for the empirical test, including Size, Profitability, Asset Liquidity, Growth, Non-Debt Tax Shield, Income Volatility, Uniqueness and Equity Circulation. The results indicate that Size and Growth are positively related with capital structure;Profitability, Non-Debt Tax Shield and Asset Liquidity are negatively related with capital structure. And then, we use Current Liability Rate as the dependent variable to conduct regression analysis for testing the stability of previous empirical results. Finally, we draw conclusions through analyses of empirical results and present some possible suggestions based on specific determinants for the optimization of capital structure.