Empirical Study Of Relationship Between Capital Composition And Performance Of State-owned Enterprises In GT Province

As is known, captial is the core element of business. Moreover, all the capital required in corporate operation comes from investment by owners and outsiders. Therefore, capital composition refers to all kinds of capital proportion and its structure. For decades, many scholars have discovered that capital composition has influence on the business performance, while this relationship is affected by a lot of factors, such as the nature of enterprise, industry, micro-economy environment and so on. Therefore, it is importance to study the relationship between capital composition and business performance from this aspect.At present, China is under a period of rapid economic development. As the backbone of the economy of our country, state-owned enterprises have their own feature in terms of capital composition, business governance, etc compared to private companies because of their state-owned nature. In the meanwhile, they are exposed to many problems with the evolution of revolution and development. For example, the capital composition of state-owned enterprises is characterized by high debt, high short-term debt ratio and dominace of state-owned shares, which results in high financial risk, high financing cost, low corporate profitability, etc. In this paper, we put forward the some solutions to optimize capital structure and improve business performance via conducting research on the relationship between capital composition and business performance.In this paper, we select the state-owned enterprises in GT province as study object (they refer to 25 enterprises solely funded by the state under the supervision of SASAC of GT province), related theory of capital composition and business performance as theory basis, four financial indicators describing the current situation of both elements as comprehensive performance evaluation indicators of SASAC, for example profitability and debt paying ability, for factor analysis, in order to study the relationship between capital composition and business performance empirically:First of all, we establish comprehensive performance evaluation formula of state-owned enterprises of GT province extracting 4 major factors form 18 financial indicators so as to reflect their real business performance, using the method of principal component analysis; after that, we study the correlativity between the indicators of business performance and capital composition, for example asset-liability ratio and current ratio, basing on the controlled variable, such as company size, type, year, model of operation and so on, by means of multiple regression analysis. The finding indicates that the correlation between businss performance and capital composition is negative, which means that business performance increases when asset-liability ratio decreases; the correlation between businss performance and current ratio is negative, which means that business performance increases when current ratio decreases; the correlation between businss performance and company size is negative. At last, we provide some suggestions to improve external financing environment, optimize capital structure and improve business performance of state-owned enterprises in GT province basing on the empirical analysis result.