An Empirical Study On The Correlation Between Firm Growth And Capital Structure

At present, with the continuous development of China’s capital market,More and more people begin to be concerned about the growth of the listedcompanies. The research of the relationship between capital structure andgrowth is increasingly becoming the focus of the research and the debate in theeconomic field About the relationship of capital structure and growth, academiahas not formed a unified cognition, and the empirical research has also not hadconsistent conclusions. In this paper’ I introduce the concept of enterprise lifecycle,and divide the enterprise into different cycles. To get known therelationship between the growth and the capital structure in different life cycle,The enterprise will go though different process which is from the establishmentto grow gradually. And in the different process, the enterprises need differentamount of capital and property. The analysis of enterprise’s life cycle，therefore,is advantageous to the enterprise to realize its status and development trend inthe market. And it can also become the base of enterprise long-term decision.In this paper，I introduced the concept of the enterprise life cycle. Theenterprise can be divided into different growth process, such as the initial, thegrowth, the maturation and so on. We will analyze the relationship of the two inthe whole process of the enterprise. The growth and the finance demand ofcompany are not same. So it will form different capital structure. So, I think，therelationship between capital structure and its growth are changing all the time,not static. According to the fact that different life cycle has different ifnancialcharacteristics, In this paper, I divides the enterpirse into three parts: the currentand the future both grow rapidly, the current keeps high growth rate and thefuture keeps low growth rate, the current has low growth rate but the future not.This article selects127main listed companies in Shanghai from the year of the2007to the year of the2012. I used the SPSS19.0sotfware to verify therelationship between capital structure and the growth by carrying on theregression analysis. It can be concluded: when the current and the future bothgrow rapidly, the enterprise’s future growth is negatively related to the capitalstructure; when the current keeps high growth rate and the future keeps lowgrowth rate, the current growth has no significant relationship with capital structure; when the current has low growth rate but the future not, the currentgrowth is significantly positively related to capital structure.Finally, I give my views and suggestions on the related problems to keepthe growth and capital structure of enterprises being match...