Listed Assets Of The Company Dedicated Its Capital Structure

Capital structure determines the contract between the capital owners themselves and between the capital owners and the other parties at interest, it has close relations with corporate governance, corporate strategy, corporate growth and corporate value. So how to arrange the capital structure, the problem itself, has become one of the most important strategic decisions inside a company. Also, analyzing diversified possible factors that influence capital structure, so as to keep a rational proportion between equity and debt and form an optimized capital structure, has been a key point of financial study for long.The theoretical and empirical studies in western countries suggested that asset specificity is an important factor that influences a company's capital structure. But it is lacking in empirical studies in the same area of our country, furthermore, compared with foreign studies, there are some shortages in the selection of variables, scope of sample and study methods in our country's studies. Consequently, based on the previous studies, this paper makes some improvements in these aspects and does some groping studies.Our study, using pooled cross-sectional observations of companies listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange from 2002 to 2004, examines the relationship between asset specificity and capital structure. Asset specificity is measured in terms of four ratios, R&D expenditure to sales, advertisement expenditure to sales, intangible assets to total assets and selling expense to sales.Results show that asset specificity has significant influences on the gross debt ratio after controlling for firm size, profitability, growth, collateral value of assets, non-debt tax shields, government ownership, refunding ability and industry. The higher asset specificity a corporate has, the lower gross debt level it will hold, but asset specificity has no significant impact on the long term debt ratio. We find that firm's refunding ability, profitability and non-debt tax shields have significant negative influences on the gross debt level, and firm size and growth have positive influences on it. Industry also has some explaining ability to the gross debt ratio. In addition, only collateral value of assets has significant influence on the long term debt ratio, and the influence direction is positive. But inconsistent with expectation, government ownership isn't found to be positively associated with capital structure in our study.