Empirical Studies Of Capital And Ownership Structure And Profitability For Smes

Medium and Small-sized enterprises have make huge contributions to the development of china's economy, but their external financing situations are awkward which have been hobbling the growth of Medium and Small-sized enterprises. The paper is meant to quantitatively analyze how the external financing situations of Medium and Small-sized enterprises impact their profits, based on the samples of Medium and Small-sized enterprises'data in Dec.31th 2006 in Shenzhen Security Exchange. By constructing linear model with ROE and ROA respectively explained as explained variables, I regress the data by OLS and prove that the debt ratio are negative correlative to Medium and Small-sized enterprises'profit ratio while stock intensive ratio is positive. The paper finally explains the results and suggests some measures like developing growing enterprise market, coming on supported policies and funding Medium and Small-sized enterprises investing funds. Debt financing also play role as it's in financing structure. Reasonable and effective debt financing patterns allow enterprises to take great advantages of their financial leverage and, on the other hand, bank to control the risks of loans.