The Empirical Study On The Impaction Of The Liabilies On Performance Of Listed Power Companies

Researches on the corporate capital structures have been a hot topic in the economic and financial theory since the MM theory was published by Modiglianli and Miller in 1958. Compared with mature theories of corporate capital structures in foreign countries, domestic capital market is far from functioning well at present due to various reasons, so it is necessary to analyze and test whether these theories are suitable to China's listed companies or not.At present, most of the domestic scholars research the influence of financing structures on the value of enterprises from the equity perspective such as equity financing and the shareholding structure, but the research on the influence of liabilities on the corporation performance is limited and the object of research is listed companies as an entity. Even less research has been done aimed at concrete industries. As the energy industry in our country, electric power industry is an important part of national economic strategy. Electric power industry played an important role in promoting the development of national economy and social progress. It is also closely related to people's daily life. Due to its unique advantage, electric power industry developed in priority in the capital market. As the capital-intensive industry, electric power industry must seize the opportunities, make full use of resources available in the capital market, and optimize their financing structure, making full use of financial effect and corporate governance effect of liabilities. Only by taking these actions can the company performance be improved, and power supply pressure will be eased. Thus, the sustainable development can be realized. With the latest financial data of listed power companies, this paper introduced the influence of liabilities on corporate performance. Detailed contents are arranged as follows: Chapter 1 firstly explains the background and significance of research about liabilities of power listed companies. Secondly, this chapter provides people a general literature review about the topic of the relationship between liabilities and the company performance and the topic of literatures on liabilities of the electric power industry. Thirdly, it introduces main ideas, methods and outlines of the paper. Last, it points out innovations and drawbacks of this paper.Chapter 2 firstly explains conceptions of financing, liabilities, financing structure, company performance and so on. Then, it introduces enterprises' financing structure theory and shows the influence of liabilities on corporate performance. Related theories indicate that liabilities could improve corporate performance by leverage effect, tax shield effect, incentive and restraint effect, information-transferring effect and shift of residual control.In chapter 3, financing status of electric listed companies is analyzed on the basis of financing mode and combined with financial data from 2005 to 2009 in the 48 sample power listed companies. We have found that some facts go against the optimal sequence financing theory. External financing is dominated and internal financing is complementary, and debt financing in external financing is given priority and equity financing is complementary, while bank loan takes majority in debt financing.The main reasons for these facts include deterioration in profitability, difficulties in internal financing, sub-developed capital market, limited equity bond financing, weak policy, easy access to loans and so on.In chapter 4, an empirical study on the impaction of the liabilities on performance of 48 sample companies selected as the research object is conducted. The empirical study shows a negative relationship between liabilities and corporate performance, it also shows that power listed companies have not paid full attention to the role liabilities play in improving corporate performance. The main causes include high debt ratio, imperfect bankruptcy mechanism, sluggish development of the bond market, unreasonable ownership structures and so on.In chapter 5, considering features of electric power industry, ideas for improvement of electric power listed companies are developed and implemented on the basis of theoretical and empirical analysis. Electric listed companies should maintain a reasonable debt levels, improve the capital structure, deepen the reform, loosen government intervention, amplify bankruptcy mechanism, enhance restriction and surveillance procedure of creditors, develop the security market energetically, realize diversification of methods of financing, decrease the ownership of state shares moderately, optimize equity structure, improve information disclosure system and reduce the problem of information asymmetry. Electric power listed companies could optimize positive effect of liabilities and corporate governance to improve the company performance.