Study On The Influence Of Financial Leverage Level, Debt Maturity Structure On Product Market Competition

The famous paper"capital structure, corporate financing and investment theory", which is published by the Nobel economic prize winner Modighani and Miller in 1958, opened a new chapter in the capital structure theory and marked the born of the MM theory. Since then, many financial experts and economists researched the relationship between the capital structure and the enterprise value from different angles along the research route which is developed by MM theory. They made great achievements. The product market competition theory of the capital structure is one of the most important achievements since the mid 1980s. This theory promotes the emerge of the strategic financial theory and has a significant sense to the company on regulating financing activities, improving business operating management, and increasing the economic benefits.The relationship between the capital structure and the product market competition is the frontier research subject of the company financial theory and the industrial organization theory. Research in this area has been done for about 20 years. The influence of the capital structure on the enterprise product market competitive has always been a controversial topic. To sum up, there are two opposing points of view: One is the Brander & Lewis (1986) school as a representative, they think liabilities can enhance the product market competition; the other is the Bolton & Scharfstein (1990) school as a representative, they think liabilities can weaken the product market competition. Because of the specific characteristic of China's economic system and capital market, how will the capital structure affect the product market competitiveness is a problem that deserves thorough research.Based on the previous research findings and the theoretical analysis, this paper, by combining the characteristics of China's product market competition and the present financing condition, studies the influence of the capital structure decision on the enterprise product market competitive with the consecutive data of A-share listed companies of the Shenzhen and Shanghai's trading market from 2008 to 2010 as an example. The result indicates that in our country's product market competition environment, the more the company's liabilities is, the lower the market competitiveness is. But within the financial risk that the company can withstand, the increase of short-term debt can help improve the enterprise products market competitiveness.The above is the content of this article. It includes six parts. Part one: The definition of the related concept, the research meaning, the main contents and the innovations in this paper. Part two: The review of the capital structure theory and the related literature review. Part three: The analysis of the related theory and the hypothesis. Part four: The design of the empirical study. Part five: The results and analysis of the empirical study. Part six: The research conclusions and policy recommendations.