| Since Modigliani and Miller made their famous theorem of MM in1958, the studyof capital structure had became to the focus of mainstream economics, many scholarsrelax the assumption of MM theory according to the actual situation of the economy,and study this issue from different aspects and angles deeply. Through the study ofcapital structure’s economical effects, scholars thinks that the capital structure is nolonger a simple financial problem, but a dynamic concept, the adjustment of it will notonly determine the financial risk and related to financing costs, but can also influencethe corporate governance and performance through certain mechanisms.This paper firstly reviews the capital structure theory and the study of this issue,most of the literature on the relationship between capital structure and performancehave come to a diametrically opposite results, and there is no unified conclusion onthis issue, so the relationship maybe nonlinear. On this basis, this paper discusses theimpact mechanism of capital structure on corporate performance, and provides atheoretical basis for the nonlinear relationship between the capital structure andperformance and for the empirical research hypothesis.In the empirical research, the paper selected the non-financial listed companies in2006to2012as research subjects. Based on the theoretical analysis, this paper appliesthe panel threshold model to study the non-linear relationship between capitalstructure and performance. Through empirical studies, prove that there exists invertednon-linear relationship between the capital structure and performance of China’s listedcompanies. When the asset-liability ratio is less than71.20%, the corporateperformance is positively correlated with it, when the asset-liability is morethan71.20%, the corporate performance is negatively correlated with it.Finally, this paper put forward some suggestions to improve the capital structureand performance, and explains the shortcomings and future directions of this article. |
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