China Manufacturing Firms' Capital Structure Factors

Since the appearance of the MM theory, the issue of capital structure has generated great interests among the theoretical circle, and how to choose the capital structure is the "riddle of the capital structure" that makes modern economists study repeatedly. Given the special institutional environment such as unbalanced development of capital market, defective corporate governance mechanism, imperfect legal protection to investors etc, the puzzle of determinants of capital structures for Chinese listed companies is "tougher". The quantity of manufacturing listed companies takes up half of the total quantity of our country's listed companies, therefore studying the determinants of manufacturing listed companies' capital structure has the universal guiding sense.This paper introduced West's capital structure theory, and carried on the analysis to the present situation of manufacturing listed companies' capital structure, then by combining the capital structure theory, carried on the theoretical analysis to the determinants of manufacturing listed companies' capital structure. The theoretical analysis had covered macroeconomic factor, corporate characteristic factor and corporate governance factor. On this basis, this paper chose A manufacturing listed companies' data as the sample data, tested empirically the impacts of those factors on the manufacturing listed companies' capital structure by adopting the factor analysis and the multi-dimensional linear return. The empirical results showed that corporate characteristic factor was the main determinant of manufacturing listed companies' capital structure, while macroeconomic factor and corporate governance factor also had certain influence. At last, according to the empirical analysis' conclusion, the paper put forward some proposals of the optimizing the capital structure of manufacturing listed companies.