Study Of The Capital Structure Of The Family Business In China

The family enterprise (FE) has existed worldwide since the industrial revolution in England in 18^th. When comes to the twentieth century, the FE is still developing as a popular economic organization in the world. For instance, in the western countries, based on Nancy Upton & William Pettythe's data, FE has occupied over 85%, and it is 99% in Italy, in America, the percentage reaches 90%. The Chinese FE began to develop since the innovation and opening policy, but we always named it as a personal corporation. Famous experts Chu Xiaoping said that the FE is 80%～90% of the personal corporation. So The FE is the research object of the article.The article is based on the meaning of FE and its capital structure, at the same time, describing the capital structure theories. Based on these theories, the article analyzes the factors that will affect the capital structure of FE. These items are the national system, the size, the controlling power, financing cost, the stage of the corporation, the marketing competition and the information unsymmetry. The controlling power is the most important factor determines the capital structure. The controlling power has two sides: one is founded on the proprietorship, the other is the FE only has the majority controlling but the ownership.The capital structure of the FE is not as excellent as it should be, We get two aspects of improving it. The internal measures are as follows: First, setting the stratagem conception and optimize the system. Second, improve the corporation father structure, enforce the financing restriction. Third, emphasizing the lines character. Fourth, make full use of the debt to save tax, so can the DFL serve the capital cost to reduce WACC. Fifth, optimize the structure of the stock-holders. The external measures are the marketing surroundings, the credit vouching system, the financing policy and so on.Throughout the analysis of the FE, I give a description of the measures to improve the financing efficiency and the capital structure, the objectivity of it exists. The developing of the FE will contribute to the economy in the long.