Financing Structure Of China's Enterprises Financing

Financial structure (capital structure) is worthy of study for its great theoretical and practical value. It is very necessary to discuss how improving financial structure influences firm performance. This article surveys research on firms' financial structure, and studies the capital structure in Chinese enterprises.The modern corporate finance literature starts with the famous Modigliani and Miller(MM) theorem (Modigliani and Miller, 1958). Since the birth of MM theorem, the economists have been paying intensive attention to the theories of capital structure in enterprises. My plan is to summarize some of the old literature and more recent thinking. In this paper I discusses the financial structure theory has evolved from MM theorem, to treating that manager has private information, to acknowledging that managerial actions affect profitability, to recognizing that firm value depends on the allocation of decision or control rights, to claiming that legal protection of investors is important.Both corporate governance and the reformations in Chinese enterprises have been the hotspots in academic and enterprise circles these years. After reviewing the theories of financial structure in all periods, this paper studies the financial structure in Chinese enterprises on the whole as well as just on state-owned enterprises. And I analyses the causes of some problems in state-owned enterprises. Then I points out that the enterprises can optimize their financial structure and improve their performance by adopt some method.