Empirical Study On The Relationship Between The Capital Structure And Financial Performance Of The Companies On The Growth Enterprise Market

The growth enterprise market established in Shenzhen in the year of2009.As an importantpart of the multi-level capital market in China, the growth enterprise market is a market whichassists the high-tech and high-growth companies to finance and capital operate. Theestablishment of the growth enterprise market is an important strategic decision in our countryaccording to the objective requirement of economic construction and social development. Itwill play a very important role in promoting the development and perfection of capital marketin China. Companies in the growth enterprise market in our country must satisfy a list of verystrict conditions, mainly include: the issuer should have excellent profitability, a certain scaleand duration, a prominent main business and a good corporate governance. Thanks to thehigh-growthness and high-novelty of them, companies in the growth enterprise marketobtained rapid development, expanding market share, growing profitability and a constantlyraising enterprise value. With the development of the companies in the growth enterprisemarket, interrelated research are also increasing, however most research are about theirgrowthness and value, there are few studies which are related to the relationship between theircapital structure and financial performance. This article will focus on the relationship betweencapital structure and financial performance to carry on the empirical research and providetheoretical basis for them to optimize capital structure and improve corporate performance.Since the creation of the MM theory, there are more and more researches about the capitalstructure. Keeping reasonable capital structure can not only bring benefit on financial leveragefor the enterprise and tax revenue to investors but also deliver the information about the valueof the enterprise for any companies. Capital structure can also affect the external investmentdecisions even influence the value of the enterprise especially for the companies in the growthenterprise market. In recent years, studies about the relationship between capital structure andfinancial performance are growing, academic research is more comprehensive and thoroughboth at home and abroad, and achieved some research results at the same time. But in theinfluence of the samples from different nation, different industries and different ownershipthey chose and different research method they use, their study result is variant.So far, there has not formed a consistent view among their academic articles for the research of therelationship between the capital structure and the financial performance and there willgenerate different results in different industries. Companies in the growth enterprise marketpossess high growthness and high novelty and obtained rapid development. Therefore, it willbe practical significant in the research of the relationship between capital structure andfinancial result which will choose the companies in the growth enterprise market.On the basis of relevant theoretical research, this article will use SPSS16.0software tocarry on an empirical research between the relationship of the capital structure and thefinancial performance in the companies in China’s growth enterprise market. This article willchoose the quota of return on equity as financial performance indicators, and capital structureindicators will include net assets per share, current ratio, quick ratio, equity ratio,asset-liability ratio, equity multiplier, shareholders’ equity ratio and tangible net worth ratiodebt ratio and long-term asset-liability ratio, fixed assets and intangible assets ratio, etc. In thefirst step, this article will study the auto correlation of the capital structure indicators andchoose the representative index of the capital structure. In the next step, this article willperform a regression analysis between the relationship of the capital structure and thefinancial performance in the companies in China’s growth enterprise market, and put forwardrelevant countermeasures and Suggestions according to the result of regression analysis. Ihope it will provide a theory basis for the adjustment and development of their capitalstructure for the companies in the growth enterprise market.