Determinants Of Capital Structure And Equity Financing

Capital structure is always regarded as the proportion relationship of equity capital and debt capital in companies,it is centralized reflection of shareholders' rights and obligations,which is also an important element of financial management and capital operation in enterprises.Since MM theory was put forward in 1958,the economic circles have been paying extensive attention to the theory of capital structure.Although some scholars in economic in the west and China have theoretically and empirically researched the factors which can determine the choice of capital structure in enterprises.Tremendous achievements were made due to the economic complexity and peculiarity in various countries,differences on methods and importance of study,The results of empirical study are not completely consistent with theory,sometimes even violate the theory of the capital structure.Based on predecessors'research,combining our country'reality,the articles makes a certain analysis about enterprise's influencing factors of capital structure,then takes listed company in 1999-2007 as an example to carry on the empirical research,offering the suggestion of optimizing the capital structure.The study extends empirical work on capital structure theory in three ways. First, it examines a much broader set of capital structure theories, many of which have not previously been analyzed empirically. Second, since the theories have different empirical implications in regard to different types of debt instruments, the authors analyze measures of short-term, long-term, and convertible debt rather than an aggregate measure of total debt. Third, the study find a different angle to explain why the listed companies prefer equity issues better than debt issues.According to article,it is divided into five parts:Part one,Introduction.This introduces background and research meaning of listed company's capital structure,article structure,method on empirical analysis and innovation. Part two.Literature review of the capital theory.This part introduces western countries'classic capital structure theory, specially the trade-off theory, Agency Theory, Asymmetric Information theory, control right theory,etc.Part three,reviews the domestic and international achievements on empirical analysis of capital structure's influencing factor,preparing for the following.Part four,Empirical analysis of Capital structural influencing factors of listed company and how the equity issue affect the structure of different kinds of debts. We take listed company of all kinds of industry as research object,using Multi-variable Regression model and Correction Analysis to carry on the research and explain the results.Part five,conclusion,suggestion and Prospection.Draw some conlusions through the analysis of the results to the listed company,and put forward the suggestion.The mainly findings of the dissertation are as follows:(1)Chinese listed companies have keen preferences of equity financing,not only because of it's lower transaction cost,but also because it helps raising the image of listed companies in the market,make them easier to get more debt financing.(2)Capital leverage of Chinese listed companies increase with firm size and growth opportunity,and decrease with firm's earning capacity.