Comparative Analysis The Effect Factors Of Capital Structure Of Listed Companies Between China And United Kingdom

Since the Western scholar David Durand presented three traditional theories ofcapital structure (net theory, net operating income theory and traditional theory) in thepaper “Corporate debt and equity costs: trends and measurement issues”, there are alot of theoretical and empirical research on the capital structure and its impact onfactors. However, in many studies, selecting two countries to do a comparativeanalysis is relatively little.This paper selects China and the United Kingdom, and does a comparativeanalysis between the two countries. Firstly, the paper reviews the existing theoreticaland empirical research. Then the paper separately analysis the present status of thecapital structure in China and the United Kingdom, and from the theoretical view toanalysis the impact factors of listed companies, do a good prepare for the next paper.The next paper selects the seven factors, through multiple linear regression analysis,and obtains the outcome that the same indicators have different relation with capitalstructure. Finally, the paper makes some suggestions about how to optimize thecapital structure of Chinese listed companies on the basis of empirical results and thestatus.The main results of this study are: first, through the comparative analysisbetween China and the United Kingdom, we know that the same indicators, such asnon-debt tax shield and the CPI have inconsistent impact direction on the capitalstructure; second, there are significant differences in the factors affecting corporatecapital structure choices between the firms in China and the United Kingdom. For theUnited Kingdom, size, ROE, income tax and the CPI are the significant effectvariables; For China, there are only two significant variables: size and ownership.Finally, the paper presents two proposals to help to optimize the capital structure ofChinese listed companies separately from macro-perspective and micro-perspective.