Research On Capital Structure And Corporate Performance From The Perspective Of Life Cycle

From the emergence of MM theory in 1958 till now, the analysis of the correlation between capital structure and corporate performance has always been a hot subject to study about by scholars of finance and economics at home and abroad in modern and contemporary times, some capital structure theories have been broadly accepted by academic field. However, the research results of academic field are inconsistent, as some scholars think that the difference in results can be attributed to industry factors, differences in samples or measure indexes. On the basis of previous researches, the current article proposes that one important factor that might contribute to the correlation between capital structure and corporate performance which cannot be ignored is – corporate life cycle.First of all, starting from the papers related to life cycle theory, capital structure theory, and corporate performance theory at home and abroad, the current article systematically explains the basic situation of the development of these three theories, and discusses the differences in capital structure in corporate’s different life stages. These contents build the foundation for theoretical support and choice of index of later analysis. Take the sample of 1293 private listed firms of our country from 2012 to 2014, and divide them according to their characteristics of cash flow by cash flow combination method into different corporate life cycle on the basis of corporate life cycle theory and previous researches. Measure the debt structure of debt-to-assets ratio(DAR), and measure the ownership structure by the share proportion of the largest shareholder(CR1), and equity balance degree(Z index), and measure the corporate performance by its economic value added(EVA), and try to examine the correlation between capital structure and corporate performance under the perspective of the whole corporate’s life cycle dynamically and comprehensively.Secondly, do descriptive statistical analysis of the debt structure, ownership structure and economic value added(EVA) of the chosen 1293 private listed corporates, and try to find out the differences and characteristics of capital structure of the whole sample and private listed companies in different life cycle stages to improve the knowledge about the correlation of capital structure and corporate performance of our country’s private listed companies. According to related theoretical analysis, with empirical hypothesis, the results of the empirical analysis of the effect that capital structure has on corporate performance of our country’s private listed companies in different life cycle stages show that: 1. The differences of capital structures of companies in different life cycle stages are significant; 2. Debt-to-assets ratio(DAR) has different effects on corporate performance in different life cycle stages. In the stage of growth and decline, debt-to-assets ratio(DAR) is negatively correlated with corporate performance, and is positively correlated with corporate performance in stage of maturation; 3. The share proportion of the largest shareholder(CR1) is positively correlated with corporate performance in all three stages; 4. The equity balance degree(Z index) is significantly correlated with corporate performance in stages of growth, maturation and decline negatively.Finally, the results of related data analysis and empirical exams propose related suggestions for optimizing the capital structure which are beneficial to the improvement of corporate performance of our country’s private listed companies.