The Research On Relationship Between Growth And The Capital Structure

The capital structure of corporate is one of important aspects of making decisions. Sincethe1950s, capital structure theory has become developing and increasing, but there are stillmuch to be of further study and cognitive problems. The growth of corporate is one of themajor factors what influence capital structure, yet many scholars got different conclusionswhen they researched on the relationship between growth and capital structure of corporate.So clarify the relationship between the growth and capital structure is of great significance. Itcan help different stages of growth corporate to choice financing strategy, avoid financialrisks positively and contribute to improving China’s capital market.This article found when studying the relationship of growth and capital structure ofcorporate, we should be the introduction of enterprise life-cycle theory. Divided the growthinto the current growth and the future growth, then we can find there are start-up stage,develop stage and maturity stage. We analyze different financing strategy in different stageand discuss the constantly changing relationship between growth and capital structure.This article selects687listed companies in the manufacturing sector from2008year to2011year. We uses the rate of sales as the current growth and select the Tobin’Q to representthe future growth. At last, to use SPSS software to do partial correlation and regressionanalysis and make the following conclusions:When corporate is in start-up stage, the futuregrowth and the asset-liability ration is a non-significant negative correlation. It is consistentwith Hong Xixi’s conclusion. It shows that the future growth is not the critical factor for thecapital structure in this stage.When corporate is in developing stage, the growth and theasset-liability ration is not a significant correlation. It shows the corporate takes little accountfor the capital structure when financing in this stage. When corporate is in maturity stage, thecurrent growth and the asset-liability ration is a non-significant positive correlation. It isconsistent with Chai Yuke’s conclusion. When the corporate determined the capital structure,it didn’t consider the capital fully. And it short of long-term plan for financing.