Research On The Influence Factors Of Thin Capitalization In Chinese Listed Companies

The thin capitalization, which means the amount of debt capital exceeds theamount of equity capital in enterprise capital structure, is a special form ofenterprise capital structure and it is a double-edged sword with regard to itsinfluences on enterprises. Owing to the tax avoidance function of debt capital, mostforeign scholars believe that tax is the major cause of thin capitalization. As for theenterprise of our country, however, what are the factors that lead to thincapitalization? Is there a remarkable difference in the degree of thin capitalizationamong different industries of enterprises? What measures are supposed to be takento control the degree of thin capitalization wisely? Those are the research focuses inthis paper.Firstly, this paper reviews and analyses the research results, and provides abrief conclusion in light of the enterprise’s actual situation in China. Secondly, thispaper introduces the related theoretical foundation to provide theoretical support forthe influence factors of thin capitalization and analyses Chinese listed companies’current situation of thin capitalization from perspectives of time and the industry.Thirdly, this paper collects data from2008to2010of Chinese listed companies, andselects companies from the industries in which the phenomenon of thincapitalization is generally existed. Many statistical methods are adopted in this paper,such as Kruskal Wallis Analysis, Factor Analysis and Multiple Regression Analysis,in order to make a comprehensive empirical study on the influence factors of thincapitalization. The results demonstrate that the tax is not the main factor ofinfluencing thin capitalization, while many important factors, such asmacroeconomic factors, industry factors, corporate characteristics, corporategovernance and independent audit quality, will together have an influence on thincapitalization. In the end, this paper make suggestions from the government andcompanies perspective, that is our government need to take necessary stepsmeanwhile companies should take appropriate measures to control the degree of thincapitalization wisely according to its own situation.