An Empirical Study On The Relationship Between Capital Structure And Company Performance Of The Iron And Steel Industry Listed Companies In China

Relationship between the capital structure and the performance of a company has been a close and constant concern in the theoretical and practical fields since the latter is related to the company's survival and development; there has been no clear conclusion despite the immense research literature; the issue remains as an important subject in the corporate financial area. Iron and steel industry plays an important role in the national economy and the capital structure of listed companies in iron and steel industry is worth studying. The paper purposes to study the relationship between the capital structure and performance of iron and steel listed companies, and to properly adjust capital structure under the premise of improving business performance through empirical data analysis. Not only will this study help managers of the listed companies in the iron and steel industry properly adjust the company's capital structure and offer them certain references in the investment and financial decision-making, but also help the shareholders or potential investors properly assess the investment value and business risk of the company.This article chooses 30 listed companies in the iron and steel industry in the Shenzhen and Shanghai Stock Exchange, based on the financial data of their annual reports from 2005 to 2009, integrating theoretical analysis and empirical analysis, descriptive statistics and regression analysis. The paper studies the factors affecting the company's capital structure and their impact degrees and the relationship between capital structure and operating performance of the listed company by building regression analysis models.This paper consists of six parts:Part 1, Introduction. This part analyzes the background and the significance of the topic, and reviews the literature. Part 2, theory basis. This part reviews the theories of the modern capital structure and the company performance. Part 3 analyzes the status quo of the domestic iron and steel industry. Part 4 analyzes the factors that affect the capital structure of the domestic iron and steel industry and their impact degree. Part 5 empirically builds the multiple regression models and studies the relationship between capital structure and performance of the listed company in the domestic iron and steel industry. Part 6 offers the study conclusions and policy recommendations.According to the domestic and foreign research results, the empirical study about capital structure focuses on the following two directions:affecting factors about the company's capital structure on the basis of MM theory and the relationship between capital structure and performance of company. The innovation of this paper lies in to study two directions.Research and analysis on the listed companies in the iron and steel industry in China conclude that the relationship between capital structure and company performance is significantly negative correlation.