Capital Structure, Equity Ownership And Performance

Based on the Principal-Agent Theory, this paper takes HS300as a sample to research the relationship among China’s Listed Companies’capital structure, equity ownership and the performance. By comparing the other methods, this paper uses directional distance function to measure firm performance. This paper uses quantile regression to test the relationship between capital structure and the performance in different stages, and puts the two sectors in the linkage relations test under a simultaneous equation throughout the whole analysis process. We specially pay attention to the effect of the ownership structure. China’s firms’long-term debt ratio is low, corporate finance is not in favor of debt financing, but tend to equity financing; the relation between capital structure and performance is significant negative, the empirical results show that debt management is unable to play its effective oversight function. The negative relation between capital structure and performance shows that Franchise-value hypothesis is more suitable for the interpretation of Listed Companies in China. The company with high concentration equity and the company with a high proportion of state-owned shares both have lower performance and lower financial leverage, therefore the theory of capital structure should be combined with the economic environment and capital market development. China should further deepen reform of the ownership structure, develop the bond market, improve the relevant laws and regulations, and strengthen internal governance and R&D to enhance firm performance.