Empirical Study On Relevance Between Capital Structure And Asset Liquidity

Both academic circles and business circles have shown great interest instudying the problem of asset liquidity and capital structure optimizationselection problem. However， empirical research from the microeconomic view whichfocusing on the relationship between liquidity and capital structure is less. Thisarticle will take the relationship between capital structure and asset liquidityof listed companies as research perspective to verify relationship between thetwo by the method of empirical study. According to the empirical result， thisarticle will provide some scientific basis and guidance for the enterprises tomake decision on financing method and liquidity management.First of all， this article carried on the literature review separately onthe research about capital structure， asset liquidity and their relationship thatexist in academic circles at present. According to the review， we can see thatthere are different conclusions on the relationship between them in academiccircles while the research method has both normative study and empirical study.Then in this paper， theoretical analysis has been made on the factors thatinfluence capital structure and liquidity and these factors will be consideredin the empirical study.Base on the background above and research status， this paper selected allA-share listed companies during2008-2012in Shanghai and Shenzhen as samples tomake descriptive statistics and expounded the present situation of capitalstructure and asset liquidity of the listed companies in our country. In theempirical study， this article selected company’s asset liquidity， capitalstructure， ratio of management fee， asset turnover， the scale of the listedcompany， the total return on assets， ratio of other fee， the profit and lossstatus of the listed company and whether the company was state-owned and otherinfluence factors to construct a multiple linear regression model. Then， OLSanalysis， fixed effects analysis and random effect analysis were made on the paneldata of that regression model. Finally， we can draw a conclusion that capitalstructure is significantly negative correlated with asset liquidity while it is positive related， but not significant， with asset illiquidity and asset structureis significant negative related with asset liquidity while it is positive relatedwith asset illiquidity though not significant. This shows that increasing incorporate debt can cause decreasing of liquidity， lower the enterprise’sshort-term debt paying ability and resulting in improving the financial leverageof company. On the other hand， liquidity enhancement will decrease the debt ofcompany， improve the ability of repaying short-term debt and lower the financialleverage.At the end of this article， according to the empirical results， some policyrecommendations have been provided from the aspects of enterprise management andsupervision， hoping that it can further broaden the horizons of studies of suchproblems and has certain practical guiding significance for listed companies tosolving problems in financial management.