The Research On The Determinants Of Capital Structure About Chinese Listed Company

Capital structure is at the basic position in financial management. The choice of capital structure not only affects the market value of the company, but also is related with corporate governance and the operation of the macro-economy. Since Modigliani and Miller put forward the MM theorem in 1958, many economists have loosen the theoretical assumptions of MM theorem, trying to study the main influence factors of the choice of capital structure based on trade-off theory, agency theory, asymmetric information theory and so on, and many scholars discussed the main influence factors of the choice of capital structure from the perspective of empirical analysis, and thus expand the MM theorem. Nowadays, capital structure theory has become a relatively mature theory in western countries. In contrast, the western capital structure theory is based on the developed commodity economy, providing that the corporate has a perfect governance structure and a sturdy financing channel. However, China is in the process of transition from a planned economy to a market economy and does not have the theoretical basis and prerequisite of the western capital structure in China, so the research on capital structure started late and mainly adopted empirical methods.This paper first presents an overview on Western capital structure theories, and then analyzes the changes of the financing environment for Chinese companies. Furthermore, I summarize the characteristics of the capital structure of Chinese companies and the variation trend by comparing with the capital structure of the western developed countries, finding that the financing environment for Chinese enterprises is gradually improving, and the stock market has developed rapidly, but the bond market is often plagued with setbacks and has not formed a certain scale. The listed company's financial leverage is significantly lower than developed countries, and current liability lever is high, showing the preferences for equity financing, but the capital structure of listed companies in China are becoming more reasonable with the improvement of financing environmental and the maturity of the enterprises.This study uses qualitative analysis method combining with quantitative analysis. Firstly, I analyze the macro and micro factors affecting corporate finance combined with previous studies, the micro issues include economic growth rate, inflation rate, the required reserve ratio, the stock market, industry and regional factors, the micro include financing costs, company size, growth, profitability, earnings volatility, collateral value and the tax effect and other factors. On the basis of carrying out theoretical analysis, this paper also analyses the effect of these factors empirically, using time-series model to analyze macroeconomic factors and cross-sectional model for the micro factors, adding regional and industry factors as dummy variables, and also improves past research methods reasonably. This paper chooses the 1993-2006 data of 124 companies at the Shanghai Stock Exchange and Shenzhen Stock Exchange as the research object. After all these analysis, I bring forward the conclusion and proposal. The last part of article analyses state share sale reform in the past few years, because circulating shares coexists with non-tradable shares in chinese listed companies and the ownership structure may also arise greater impact on corporate financing, so this article makes a preliminary theoretical analysis on the state share sale reform, combined with the changes before and after the share reform.