The Relationship Between Capital Structure And Operating Performance

Since nineteen fifties, researches on enterprises' capital structure have always remained a hot issue for world finance theorists. In China, since reform and opening up was adopted, especially after the 90s, state-owned economy has gradually withdrawn from general competition industries, while private economy has witnessed unprecedented development and has become a great force of Chinese national economy as well as an integral part of Chinese socialist market economy. Hence there are abundant studies of Chinese private enterprises in the field. But there is little access to studies on the capital structure of the private listed enterprises, even less about capital structure of regional single industries.Chinese listed private enterprises represent Chinese private economy. And listed private enterprises in Zhejiang are admittedly the leading runners of all Chinese listed private enterprises. Therefore it is the aim of this thesis to give an empirical analysis of the capital structure, management achievements, corporate governance of Zhejiang private manufacturing listed companies whose production and management are in the process of transformation, taking Zhejiang province—with its title of a big manufacturer and its booming private enterprises. To begin with, this thesis, based on the basic theories of capital structure and previous research results, presents a summary of the nature of capital structure, basic theories and theories on its relation to management achievements. Then it analyzes the development level and characteristics of Zhejiang private listed enterprises, with a summary and comment of the basic characteristics of the capital structure and management achievements of the Zhejiang private manufacturing listed companies. It is found that the overall level of assets and liabilities of Zhejiang private listed enterprises is not high and their management ability, profiting ability, and credit capacity are generally higher than the national average. And then after a linear regression of the nine variables concerning capital structure and management achievements, we find: There is a significant positive correlation between capital liabilities of Zhejiang private manufacturing listed companies and their management achievements; There is a certain positive correlation between the size of the board and the management achievements; there is a significant positive correlation between management achievements and the rate of assets liabilities; There is a positive correlation between the proportion of senior management holding shares and the rate of assets and liabilities. Finally, concerning the problems found in Zhejiang private manufacturing listed companies , the thesis tentatively gives some suggestions about improving capital structure and management structure.