The Capital Structure Of Listed Companies In China

Capital structure(CS) is various sources of enterprise's funds and their ratios among them. The means of fund-raising include internal sources, i.e. retained earnings, and external sources comprised of debt (loans and debenture), equity (IPO and subsequent public offerings) and quasi-equity instrument (preferred stock and convertible debenture). CS, reflecting structure of funds, has its crucial influence on the cost of funds, market value of enterprise and corporate governance. CS determines corporate governance, and different CS means different mechanism of corporate governance through its direct impact on the stimulus of manager's operating and investing activities resulting in different enterprise's operating efficiency and market prices of its securities. Meanwhile, corporate governance also determines change of CS. Reasonable CS has special functions in China. On the micro level it can ameliorate the mechanism of corporate governance and improve the financing and operating efficiency; on the macro level it can help establish debenture market, accelerate the reform of financing systems, and facilitate social financing activities, consequently realizing the optimal allocation of financing resources and promoting the growth of economy in the long run.The main task of the theory of CS is to explain the motive of enterprise's selection of appropriate ratio among the three financing means. In China, the following questions is especially important in the CS research:1. Compared with other countries, what are the characteristics of our listed companies' CS, what is different in financing order and what causes it?2. What factors influence our listed companies' CS? In these factors, which is the dominant one, share structure, firm specific factors or financial factors?3. What economic factors lie behind the determination of our listed companies' CS? What is its mechanism?4. What is a reasonable CS? 5. What policies should be adjusted to establish reasonable CS? Since the choice of fund-raising is not only connected with enterprise's internal factors, but also restricted by external factors including taxation, law of investors' protection, type of financial system and state control of financial system, it is necessary for these institutions to be reformed for a reasonable CS.In this dissertation, based on the methodology of consistency of the theory and empirical materials, various influencing factors of CS are fully analyzed to find the most important one. To explain the empirical results, the theory of state control rights and game view of institution are employed to reveal the economic logic behind them. In the end, suggestions are given to establish efficient CS.The dissertation has six chapters:In the first chapter, the theory of CS is reviewed. Since the development of the theory of CS is closely linked to the development of the theory of firm, the former evolves with the latter. As a result, the theory of CS can be divided into three categories from different perspectives: static trade-off theory, agent theory and financial contract theory, which are based respectively on financial factors, the principle-agent relationship and control rights derived from respective firm theory: profit-maximizer, the conflict between principle and agent and the optimal allocation of control rights among investors. Compared with the other two theories, only the financial contract theory explains explicitly the mechanism of the determination of CS and its linkage with corporate governance and relevant institutions. Chapter two empirically analyzes the general characteristics of our listed companies' CS, and also compares them with those of other countries. The results reveal that the total ratio of debt to asset(TD) is lower than that of developed countries and even below the average level of developing countries, and show correlation between TD and macro-variables and the development of financial system. TD negatively correlates with the ratio of bank loans to GDP...