A Study About The Relationship Between Capital Structure And Corporate Performance On China’s Cross-Listings

Economic globalization and the development needs of enterprises makecross-listing become emerging and popular. This paper is based on this hot topic. Inthis paper, we will start from the corporate governance, and then study the relationshipof cross-listed companies’ capital structure and corporate performance. Firstly, wesummarize the motivation of cross-listing and impact on the companies. Then wetheoretically analyze from the structure of corporate governance, equity and debtmanagement. We also study the relationship of cross-listing, capital structure andcorporate performance. In this paper, we make a comparative study of159cross-listedcompanies, and domestic non-cross-listed companies from2010to2012. The mainresults are as follows:(1)Cross-listed companies’ largest shareholder’s shareholdingratio has a more significant positive correlation with corporate performance thannon-cross-listed companies;(2)The largest shareholder with state-owned shares has anegative correlation with corporate performance. Non-cross-listed companies not onlyhave a negative correlation, but also have a greater impact;(3)Cross-listed companies’equity balance degree positively correlated with corporate performance, whilenon-cross-listed companies don’t;(4)Cross-listed companies’ debt level and CorporatePerformance have effects on the company’s performance in a certain range. The studyresults suggest that: Cross-listed companies’ capital structure is superior tonon-cross-listed companies; Cross-listed companies can alleviate the agency costs;Cross-listed companies remain subject to the negative correlation of state-ownedshares; Cross-listed companies increase debt financing, but the creditor governanceneeds to be improved. In short, cross-listing can improve the company’s capitalstructure management in a certain range, thereby improving the company’sperformance, but the downside still needs to pay more attentions and do researches.