Study On Mutual Relation Between Capital Structure And Operation Performance Of Construction Industry Listed Companies

At present, China's construction enterprises have many ways of financing, but the construction business is somewhat biased towards the use of liabilities, As the company's Asset-liability ratio is high, the risk is too concentrated, when the macro-policy begin to adjust, builders are likely to enter the awkward dilemma. In addition, how to improve business performance and create more income for investors has always been the core of a listed company, which is related to the listed company's capital structure. So, Dose the operating performance of construction industry listed companies affect the capital structure? Will the debt financing help to improve the operating result of listed companies? what is the optimal assets and liabilities rate of construction industry listed companies?This article revolves around the interactive relations between business performance and the capital structure of construction industry listed companies. Based on the brief summary of capital structure theory and empirical research, firstly, the article analysis completely the features of the capital structure and companies performance about the construction industry listed companies, and get some relevant conclusions by using a large number of forms and chart. Secondly, this article that analyzed the mutual effects between capital structure and operating performance proposed two basic assumptions, and applied factor analysis to construct a comprehensive performance indicator as proxy variable. And then by constructing simultaneous equation model, theoretical hypotheses were empirically tested using a sample of 24 companies of construction industry.We find that Comprehensive performance and asset-liability ratio of construction listed companies is positive correlation, the relationship between capital structure and Comprehensive performance is the quadratic function, and when asset-liability ratio is about 66.73%, corporation has optimal comprehensive performance. This conclusion supports the trade-off theory perspective, when the liabilities reaches a certain level, the tax effect of debt will be offset by the increased risk of bankruptcy, which led to lower corporate performance.