Empirical Study On The Relationship Between Sme Board Listed Companies’ Capital Structure And Stock Liquidity

The small and medium-sized enterprise financing problem is always the hot issueof the society. In the investment process, the investors have been very keen on theSME Board companies. We integrate the two hot topics as the starting point, andmake research with the relations between the capital structure and the stock liquiditywhat have been discuss extensively in the current in the academia. We try to offerguiding opinions for the small and medium-sized enterprise financing options andinvestment decisions of investors.First of all, this paper reviews the literature on the capital structure and the stockliquidity. We use the theories of the capital structure and the stock liquidity to makeanalysis, and puts forward the theory assumption. At the same time, to ensure theempirical model integrality and rationality, we analyze the main influence factors ofthe capital structure and the stock liquidity, and put the related factors to the empiricalmodel of the simultaneous equations.Then, we introduce the present situation of small and medium enterprises boardcompany, and the transmission mechanism of selected topic. We select the ones of2006-2010years’ SME board listed companies as samples. We select ratio of liabilitiesto assets and long-term liabilities ratio as capital index, select the turnover as the stockliquidity index, and use2SLS to make mutual empirical analysis of the relationbetween the capital structure and the stock liquidity. In order to ensure the validity ofresults, we make another empirical analysis between Short term debt ratio and turn.Finally, this paper draws a conclusion that the capital structure and the stockliquidity are negative correlate, namely financial lever improving will make the smalland medium-sized board companies operate at increased risk. So the managers tend tochoose equity financing, and the reducing of the expected stock returns wil reducestock liquidity. At the same time the stock liquidity enhancement can cause the cost ofequity financing lower than the cost of debt financing. Thus the managers will tend tochoose equity financing, and company financial level will be reduced. At the end of the article, this paper try to give relevant policy recommendations from the small andmedium-sized enterprise financing present situation and the interests of investorspoint of view, and hope to solve the problems faced by the current market.