A Study On The Rate Of Return Of Industrial Capital In Shanghai And Its Influencing Factors

According to neoclassical theory, capital deepening makes marginal capital returns diminish, so that the return on capital is reduced. Experiencing 30 years of reform and opening up, especially since 2000, China’s capital stock is still increasing and investment rate has not been slowed, then if there is excessive investment in China? Whether China’s capital return decreases? The discussing of this issue has both of theoretical and practical significance. There are many literature of Return on capital of China, from different perspectives. This paper chooses Shanghai’s industry as the research object, trying to study return on capital from a more microscopic perspective.First, this paper reviews the theories about the factors that influence the rate of return on capital. According to the results of theoretical analysis results in: increased levels of debt would reduce the return on capital; total factor productivity increase will increase the return on capital; capital-labor ratio and return on capital employed negative correlation; increase the proportion of exports will increase the return on capital; government The intervention reduced the rate of return of capital; increase the share of agriculture will lead to a decline in the return on capital of industrial enterprises; the development of the financial sector will increase return on capital.Secondly, this paper describes the sample selection, and other data sources, variable selection and estimation, and set up a panel data model for future empirical analysis.Then, this article describes two methods to calculate the rate of return on capital, which is based on the calculation method of the macro data and calculations based on micro-data, and noted that two calculation methods with their respective advantages and limitations. Wherein the calculation method based on the macroeconomic data for the most current literature used, but because of incomplete statistics, this method is not easy to calculate the return on capital by industry, so the article does not apply. Microscopic characteristics return on capital, it’s easy to understand the calculation method, changes in factors affecting the results can be explained by analyzing the relevant empirical data, the results to changes in economic fundamentals, relatively rapid response elements, through corporate financial data You can calculate the new rate of return on capital. Taken together, this paper profits to equity ratio is used as a measure of return on capital targets, indicators equivalent to ROE of accounting.Next, the paper estimated 1999- The 2012 overall industrial sector in Shanghai return on capital, we found and did not decline, and in most years were higher than the benchmark lending rate, which reflects the Shanghai industrial sector capital investment in the absence of the so-called "surplus"; and measured the state-owned, private and foreign capital gains three industrial enterprises, state-owned enterprises found that the rate of return lower than the other two types of enterprises, which provide some hints for the next state-owned enterprises; after estimates return on capital of the various industrial sectors, we found a big gap between the industry rate of return, and monopoly industries, higher capital and technology-intensive and lower utility industry.Finally, the chapter on the influencing factors of industrial enterprises in Shanghai the rate of return on capital empirical test. According to the results of empirical analysis, asset-liability ratio has a significant negative impact on the return on capital, which is the majority view as well as foreign capital structure of the classical theory of empirical results are inconsistent, suggesting that corporate debt financing constraints and incentives, there is no industry in Shanghai give full play to the role of business; TFP increase will increase the return on capital; to increase the proportion of time will result in the return on capital increase, this is because the capitalist pursuit of the highest profit levels, facing into the international market in fixed costs, high return Companies can obtain profit undergo face fixed costs in the international market; government intervention will push down the rate of return on capital, which is consistent with our hypothesis, too much government intervention resulted in inefficient allocation of resources, resulting in the investment environment worse, the return on capital is small; the share of agriculture negatively correlated with returns on capital, which is consistent with our hypothesis; the balance of loans from financial institutions affect the rate of return on capital is not significant, probably due to the development of the financial sector, on the one hand, access to and use of funds easier, less costly, and more efficient allocation of resources, which may enhance the rate of return. On the other hand the development of the financial sector so that the cost of capital is reduced, based on cost considerations, and more industrial enterprises will return on the capital invested in a smaller place, making it possible to reduce the overall rate of return on capital.