Our Automotive Industry Listed Companies Product Market Competition And Capital Structure Relations

To the enterprise product market competition and capital structure research has been researched either in the industry economics or corporate finance. Restricted by assumptions and boundaries, both scholars have not explained the relation of the product market competition and capital structure, thus make their conclusions can not be reasonable to explain enterprise’s behavior in reality. Until1986,The study of brander and Lewis broke the deadlock, begin to combine product market competition and capital structure research. All the research has attracted the attention of scholars, surrounding the issue carried out a series of theoretical and empirical research, to promote the development of the field. But because the time of this theory research is shorter, the view is not unified, and even conflicting views are drawn; In empirical aspect, the related literature is not a lot, and most of the company’s data from the United States. Domestic research in this field is rather new, the results are also rare, It need us to make further research about product market competition and capital structure. The result of this study demonstrates on the determinants of capital structure must consider the influence of the industry, different industries also have different product market competition affect the capital structure. So that different industries to analyze product market competition and capital structure has its far-reaching significance. Not only can deep understanding to a particular industry at the same time, also help to product market competition of our country enterprise and to provide some reference in the optimization and strategy.This paper first to review literature of product market competition and capital structure both at home and abroad, including the foreign literature respectively from two aspects of theory and practice are reviewed, at present the basic point in the field is divided two deas, so each in theoretical and empirical liabilities increased product market competition and liabilities has weakened the ideas of the product market competition, the two were summarized.Domestic research is rather less, so only made the simple review.Secondly, after analyzing the basic theory, this paper based on Brander and Lewis model builds a general model. Through an analysis of the reasoning model, the results show that under the condition of external conditions is better. The increase of enterprise liabilities leads to expand output, so there is positive correlation between the capital structure and product market competition.Then, after the basic conditions of our country automobile industry are introduced, puts forward the assumption of two research, and then we use2000-2010data of China’s automobile industry listed companies, study Chinese automobile industry listed product market competition and the relationship between corporate capital structure and empirical research, the following conclusions:1, auto industry product and corporate capital structure is related to the intensity of competition in the market, namely enterprise through radical financial strategy to cope with the fierce market competition, at the same time through radical products market competition strategy will lead to a radical way of capital structure.2, the same industry internal enterprise capital structure should have relative stability and comparability.Next, we’ll faw car co., LTD as a case analysis, through the company’s financial performance and operating conditions, competitive strategy, financing of capital structure and competitive strategy implementation and so on, carries on the comprehensive analysis, the results show that radical product market competition strategy in faw car co has its rationality, and also by an increase in liabilities to capital structure to improve their market competitiveness of products, and found that faw car product market competition and capital structure is the positive correlation by the mutual influenceFinally, the paper studies and analyzes the deficiency and prospect are putted forward.