The Study About The Capital Structure Of China's Listed Agribusinesses

Listed agricultural companies is a more advanced form of corporate organization when an agricultural companies developed to a certain extent, it is the main way of the capitalization of China's agricultural industry and one of major player for China's agriculture in international competition after joining in the WTO . In this form, agricultural production resources are efficiently organized and give full play to advantages of scale of economies and brand advantages, achieved breakthroughs in agricultural production and modernization of standardization, promoted the agricultural structure adjustment and upgrading the level of industrialization, it creates national agricultural leading enterprises with international competitiveness. However, due to the failure of the market, as well as supervision and management deficiencies are not in place, some listed companies collected money in the stock market under the banner of Agriculture, while invest a lot of funds into non-agricultural areas instead of agricultural sector. This non-agricultural expansion has been very common in listed agricultural companies, which makes efficiency of the company's agricultural funds very low, and insufficient fund keeps the main industry lack of power. A very important reason for this is the problems of the agricultural listed company's capital structure, low assets-liabilities ratio, without making use of tax saving effect of liabilities; internal financing ratio is too small, against the pecking order theory; liability structure is irrational, the proportion of long-term liabilities is low; ownership structure is also unreasonable, the state-owned shares count the most part. Solutions to these issues are urgent, which are to change the irrational structure of the capital in order to change the company's management structure, and changes in corporate behavior and corporate performance.Since the creation of the MM theorem, the capital structure theory of enterprises has been the focus of attention for economists. In accordance with the modern theory of capital structure, corporate finance should follow the order of pecking order theory, that is, internal equity financing priority, followed by debt financing, outside equity financing the final. As a result of China's listed companies' special ownership structure and the equity financing preference, the listed agricultural companies on the whole, show contrary with the financing structure of modern capital structure theory, which had cause a range of problematic issues. The equity financing preference of the agriculture listed companies will increase corporate financing costs, which obstruct the maximization of the enterprises' value.Under China's existing capital market framework, there are many factors affect capital structure of agricultural listed companies, to sum up: First, the internal factors, including the size of the companies, asset structure, company profitability, the company's growth, non-tax liability shield, income tax and ownership structure, followed by industry factors, including the industrial concentration and product life cycle, corporate governance is another factor, and finally the macro-economic factors, including the level of economic development, inflation rate and the actual lending rate. This thesis is trying to find the factors that influence the capital structure of China's listed agricultural companies though empirical study, and then goes further to find the strategy to optimize the capital structure of the listed agricultural companies, in order to achieve sustainable development.