Capital Structure And Enterprise Value Empirical Study Based On A Share Privately Owned Companies From EVA Perspective

Capital structure theory, as financial management theory of the core elements, has been the subject of theory and practice for attention for a long time. After50years of development, now has formed a set of perfect theory system. There are many appraisal company value methods, such as Tobin Q,EVA etc. Economic value added, as a new company value measure index, was born in the United States. It is now popular worldwide. The index overcome the defects of the traditional accounting index, calculate more comprehensive, science, justice. The index can lead enterprise wary of investing, scientific decisions, and continuously enhance value creation ability.About capital structure and the company value relations the conclusion is completely different, because of the different choice of capital market. This is worth us further study. EVA can be used in the capital market of our country still needs further proving. In our country, the implementation of EVA examination is limited in large state-owned enterprises, private enterprises are to inspect. Private economy on China’s economic development is very important. This article selects the A share market of China (not including the small and medium-sized board and GEM) of the private listed companies as the research object.The content of the article is divided into two parts:Theory and demonstration. In the part of theoretical analysis, this paper explains the concept of capital structure, and make a review of the literature. In this paper we use the generalized structure of capital concept, including equity and liabilities. Secondly, the EVA concept, calculation methods, research and development present situation have carried on the explanation. Furthermore, the author further discusses the private listed companies in China’s development status, as well as EVA in China use case.In the empirical part, the author chooses the ratio of liabilities to assets ratio, commercial credit, bank credit ratio, current ratio and inside and outside source financing ratio as a measure of capital structure index. Based on economic value added rate and capital structure indexes of descriptive statistics and multiple regression analysis, a conclusion can be obtained as follows:Ratio of liabilities to assets rise will lead to a decline in the rate of EVA; Improving the private listed companies of the commercial credit ratio could help improve the company’s ability of value creation, and bank credit ratio is negatively related with EVA rate;the correlation between Ratio of current liabilities and the rate of EVA is positive EVA rate rises with inside and outside source financing ratio. In the empirical results based on Private Listed Companies in China, combined with the actual situation of the regression results are discussed in this paper, the author puts forward5suggestions. To establish a reasonable rate of assets and liabilities, and improve financial management level; Establish enterprise value management system based on economic value added EVA oriented; Strengthen credit management, advance information rating system construction; Establish the scientific debt maturity structure, develop a variety of financing channels: Regulate the capital market, increase external source financing supervision.The main characteristics of this paper lies in the absolute value of EVA index was amended. EVA rate between different companies is compared, not affected by different asset size effect. In the empirical study, in addition to traditional capital structure selection of indicators, combined with China’s private listed company capital structure exists in the realistic problems, the author puts forward internal, external financing ratio of this index as an explanatory variable. The author selectes2008-2010year in the latest3years financial index data, for the capital structure and makes an empirical study on economic value added.The limitation is that this paper only studied the capital structure of private listed companies and the relationship between the economic value added. For many of the private unlisted companies, capital structure and economic value added is equally important. Secondly, EVA rate calculation formula also needs further refinement. Therefore, research can have certain inaccuracy.