Capital Structure On Corporate Investment Behavior - For Example, Investment In Fixed Assets Of Listed Manufacturing Companies

The investment plays an important role in the process of economic growth. It is necessary to have a proper understanding of the firms' investment behavior, because investment decisions are ultimately made at firms level. Based on the case of listed manufacturing firms' fixed-asset investment, this paper examines the impact of capital structure on firms' investment behavior. The main findings of this paper are as follows:(1) In general, there is a significantly negative relation between capital structure and firms' investment.(2) When divide the sample into three groups based on the growth opportunities, we find this negative relation between capital structure and firms'investment holds for firms with low growth opportunities and median growth opportunities, but not for high growth opportunities firms.(3) When divide the sample into three groups based on the firms' scale, we find this negative relation between capital structure and firms'investment exists only for median scale firms, but not for large scale firms and small scale firms.(4) There is a stable negative relation between capital structure and firms' investment across different years.(5) The negative relation between capital structure and firms' investment also exists for subsamples of better performing firms.(6) There is a significantly negative relation between internal cash flow and firms' investment.(7) Equity refinancing has promoted the firms' investment.Finally, we analyze the empirical results briefly, and offer some propositions to both business enterprise management and government economic policies.