China's Private Listed Company's Capital Structure Empirical Research

The theory of capital structure has become a hotspot subject in corporate finance field. After the development of MM theorem, relevant theoretical and empirical research emerged in an endless stream. The capital structure theory mainly studied on the relationship of the capital structure and corporate value, and its key question is how to confirm the optimum capital structure in order to improve the corporate value.State-owed economy withdraws from the general competition industries step by step since China's reform and opening to the world. The nongovernmental economy gradually becomes the crucial base and component of the national economy. China's nongovernmental listed companies are the advanced part of nongovernmental economy and the fresh blood of China's capital market. Compared with the state-owed listed companies, the behavior of nongovernmental listed companies is much more similar to the practices of listed companies in the market-based countries. Following the earlier empirical studies, this paper discussed the fundamental characteristics of capital structure, and the interrelationship between capital structure and corporate performance of China's nongovernmental listed companies.This paper is organized into seven sections. Section one covers a brief literature review of the capital structure debates. It mainly introduced the contents of tradeoff theory and the pecking order theory, including their relative empirical analyses. Section two defines the nongovernmental listed companies, and introduces the regional and industrial distribution of China's nongovernmental listed companies. Section three defines capital structure which is defined to asset liability ratio in this paper, and analyzed its statistical feature. Section four empirically analyzed the financing behavior. Empirical results suggested that the capital structure of nongovernmental listed companies tends to a goal rate, and doesn't accord with the prediction of pecking order theory: Nongovernmental listed companies prefer short-term debt financing and stock financing for long-term capital sources. Part five analyzed the determinants empirically, the result in this paper proved that the determinants of nongovernmental and state-owned listed companies are similar: the size, growth opportunity, asset structure, and the maturity have positive relations with capital structure. The profitability, non-tax shield have negative relations with capital structure. Part six built simultaneous regression model to explore the relationship between capital structure and corporate performance. The results indicates that the capital structure is negative related with corporate performance. And at last, this paper proposed correspondent suggestions to optimize and improve of the capital structure and performance of nongovernmental listed companies.