An Empirical Study On The Determinants Of Capital Structure Of Private Listed Companies In Zhejiang Province

Since three decades of reform and opening‐up, the national economy, especially private economy, has developed prominently. Zhejiang province is a typical example of private economy with rapid development. With the development of private economy, private listed companies of Zhejiang considered that their capital structure should be optimized, thus to reducing the cost of capital and creating profit maximization. This paper aims to find out what factors will affect the capital structure, and whether the so called optimal capital structure exists in the capital structure of an enterprise, and then, proposes some suggestions to those private companies about how to optimize their capital structure of private listed companies, and reduce their cost of capital. Therefore, they are able to seek a better development thus to promoting the whole development of the private economy in Zhejiang province.Theory of corporate finance has been a hot issue in the research of enterprise capital structure. As for the research of capital structure, especially the submission of MM theory, many scholars in home and abroad made a lot of theoretical research and instance analysis, and got some conclusions.This paper, using the research achievements of scholars from home and abroad for reference, collecting the annual reports and related data of the private companies in Zhejiang province for analysis, integrating statistics and econometrics as a method, implemented series of instance research of the influence factor of those private companies in Zhejiang province.Initially, this paper conducted a statistical description of private listed companies in Zhejiang. The writer found that there was a high level of ownership concentration in the private listed companies in Zhejiang, and the company’s gearing ratio had a tendency of increasing year after year. The industry of private listed company in Zhejiang is comparatively concentrated, the main industry is manufacturing, while the amount of computer, culture, and finance companies is relatively small. The proportion of current liability is relatively large in the asset‐liability of listed companies in Zhejiang province. Then, the writer implemented series of instance research to find out the relevance among size, profitability, growth rate, collateral value, the actual amount of corporate income tax and capital structure of a firm, and found that there was no apparent relevance between firm size and asset‐liability ratio, between collateral value and asset‐liability ratio, while, there was positive correlation between the profitability and asset‐liability, between the growth rate and firm size, between the level of ownership concentration and asset‐liability ratio, and between the corporate income tax and the asset‐liability ratio. Ultimately, this paper proposed some countermeasures and suggestions aiming to optimize the capital structure of those private companies, thus to promoting the development of private economy of Zhejiang province.