Ningxia Listed Company's Capital Structure Analysis

the modern theory of capital structure indicates that the capital structure of the company does affect the value of the company. However, the formation of the structure is the result of its long-lasting practices of financing. Based on a brief introduction of the theory of the capital structure in early times, this paper mainly elaborates the modern theories in the same field: the agent theory, signal-passing theory, orderly financing theory and domination theory, etc. Then, Ningxia listed companies are set as the samples in this paper. With the relative data over the period of 1999 to 2003, the paper provides a systematic analysis of the effect that their practices in financing and the capital structure have on the value of the firm. It finds that Ningxia listed companies are partial to financing with debt financing as its principle means, which leads to the high leverage ratio and the value of the company falls.In order to seek the approach to optimize the capital structure, the author, making a careful analysis of the authentic proof, lists the keys that affect the capital structure of Ningxia listed companies: declined profitability, enlarged scale of the firms, and dislocation of stock ownership. But the root of them comes from both the firms' exterior (such as policy and regulations) and interior elements. From the study above, the paper presents some measures for optimizing the capital structure of Ningxia listed companies, which can be concluded as follows: to optimize structure of stock ownership, enhance stockholders' supervision system, set up inspiration system in the firm, develop the firm' s debt securities market, further reform the commercial bank, impose on standard bankruptcy process, reduce restrictions on the financing of stock ownership, strengthen and enlarge industries with their advantage of rich resource, improve the competitiveness of the products, etc.